S-OIL said on the 11th that its first-quarter operating profit on a consolidation basis came to 1.2311 trillion won, swinging to a profit from the first quarter a year earlier. First-quarter revenue was 8.9427 trillion won, down 0.5% from the first quarter a year earlier but up 1.7% from the previous quarter.
By business institutional sector, the refining institutional sector posted revenue of 7.1013 trillion won and operating profit of 1.039 trillion won. The petrochemical institutional sector recorded revenue of 1.1044 trillion won and operating profit of 25.5 billion won. The base oil institutional sector posted revenue of 737 billion won and operating profit of 166.6 billion won.
S-OIL said more than half of its first-quarter operating profit was inventory-related effects from higher oil prices due to the Middle East crisis. S-OIL said, "Although stronger refining margins were partly offset by scheduled maintenance and the implementation of the petroleum price cap, refining institutional sector profit improved from the previous quarter due to the lagging effect."
The lagging effect is a time-lag effect in materials and supplies input that arises from the gap between when crude is purchased and when products are produced and sold. When crude prices rise between the time of purchase and arrival in Korea, margins expand due to the lagging effect; conversely, when crude prices fall, margins shrink because of the lagging effect.
Inventory-related gains in the petrochemical institutional sector also increased, helping swing to a profit. However, the lubricants institutional sector saw operating profit decline because the surge in materials and supplies prices was not fully reflected in product prices.
S-OIL said it is stably securing crude supplies even amid a global environment of heightened supply-demand uncertainty. S-OIL said, "Based on a long-term crude purchase agreement with parent company Saudi Aramco and a long-term shipping contract with Bahri, a Saudi Arabian shipping and logistics company affiliated with the parent company, we have worked to secure crude stably," adding, "In Mar.–Apr. this year, monthly import cargoes fell to as low as 7.5 due to planned regular maintenance, but in May–Jun. we plan to bring in 10 cargoes per month, the normal level."
The Shaheen Project, a petrochemical facilities project, is also gathering pace. As of the end of Apr., overall progress stood at 96.9%, with mechanical completion targeted for the end of Jun. S-OIL plans to conduct trial runs of the Shaheen Project by the end of this year and complete preparations for commercial operation.