UPDATE 1-S.Korea SK Energy to keep Aug crude runs steady

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SEOUL, July 23 (Reuters) - South Korea's SK Energy (096770.KS) plans to keep crude runs in August steady from July at around 790,000 barrels per day (bpd) to 800,000 bpd, a company source said on Wednesday.

The country's top refiner will keep spot jet fuel exports steady at 120,000 tonnes in August, and gas oil exports at 160,000 tonnes, also the same levels as July. [ID:nSP219183]

For gas oil, SK Energy has sold cargoes of 0.001 and 0.5 percent sulphur, with prices for the high sulphur grade fetching between a 10 cents a barrel discount to Singapore quotes and parity.

But premiums for the 10 ppm grade dropped to $2 a barrel to Singapore quotes, on a South Korean free-on-board basis, from plus $2.50-$3.00 a barrel for July supplies.

SK Energy will skip prompt-delivery fuel oil exports for the third-consecutive session in August as the refiner has been feeding its new 60,000 bpd No.2 Residual Fluid Catalytic Cracker (RFCC) which started operation in June.

The RFCC produces lighter and more expensive gasoline, using heavier and cheaper fuel oil as feedstock.

SK Energy, which supplies a third of the country's total fuel oil needs, has already imported 80,000 tonnes of fuel oil for end of July arrival to make up for the volumes used for gasoline.

"This is not SK's first fuel oil import as it has been buying small amounts since the beginning of the year after cutting crude runs due to low margins," said a refinery source.

"But this could be the beginning of SK's switch as a regular fuel oil importer," the source added.

Fuel oil supply from the refiner could drop by half starting this month due to the operation at the RFCC, industry sources said.

South Korea uses an average 700,000 tonnes of bunker fuel a month, mostly for utility purposes. (Reporting by Angela Moon; Editing by Keiron Henderson)