SINGAPORE (Reuters) - Two South Korean refiners are exporting excess cargoes of residual fuel oil to nearby China, displacing some Singaporean sales of the commodity which can be used in ships and power stations, three trade sources said.
Scheduled maintenance work at S-Oil Corp’s Onsan plant in September and a fire at GS Caltex’s Yeosu refinery in August has curbed the facilities’ capacity to refine residual fuel oil into other products, meaning they have been shipping excess cargoes to China, the sources said. They declined to be identified as they were not authorized to speak with media.
S-Oil did not respond to a request for comment, while a GS Caltex spokesman declined to comment.
The sources estimate GS Caltex, the nation’s No.2 refiner, has exported between 100,000 and 200,000 tonnes of residual fuel oil as a result of the fire, mostly to China.
S-Oil, the country’s third-biggest refiner, is estimated to have exported 120,000 tonnes of 380-cantistoke fuel oil into China in September for use as a marine fuel through three 40,000 tonne cargoes.
That has pushed out some exports from Singapore, the sources said.
“The drawing power from Singapore into the north seems less (after the secondary-unit closures at the two South Korean refineries),” said a Singapore-based fuel oil trader.
GS Caltex is exporting most of its excess fuel oil cargoes since the unit shutdown to China at the expense of Singaporean exports to China, said a trade source in South Korea.
Fuel oil demand in China is being supported by increased run rates at independent refineries, said Nevyn Nah, oil products analyst at Energy Aspects. Those refiners use the product as a feedstock.
He also noted that the lifting of China’s annual fishing ban, starting from August through to September, depending on location, means more fishing boats will head out to sea, burning more fuel.
GS Caltex earlier in the month said it was unsure when it would be able to restart its 66,000 barrels-per-day (bpd) hydrocracker after the fire at the Yeosu plant. The company is equally owned by GS Energy Corp, a unit of GS Holdings and U.S. oil major Chevron Corp.
S-Oil shut one of its hydrodesulphurisation units for 25 days of planned maintenance in September.
China is a net importer of fuel oil used as a refining feedstock or in refueling marine vessels.
Reporting by Roslan Khasawneh; Additional reporting by Jane Chung in SEOUL; Editing by Joseph Radford