Refining and Petrochemical Industries "Get Breathing Room" as Government Secures Crude Oil and Naphtha

The Financial News – The refining and petrochemical industries, which had been urgently seeking crude oil and naphtha supplies, welcomed the government’s measures across the board.
Kang Hoon-sik, Chief of Staff to the President, who returned after visiting Kazakhstan, Oman, the Kingdom of Saudi Arabia and Qatar in the Middle East as President Lee Jae Myung of South Korea’s Presidential Special Envoy for Strategic Economic Cooperation, announced on the 15th that imports of 273 million barrels of crude oil had been secured by the end of this year. He added, "We have also secured up to 2.1 million tons of naphtha through year-end," noting that this volume is equivalent to about one month of imports based on last year’s levels.
Crude from Oman, the Kingdom of Saudi Arabia and Qatar, and other Middle Eastern producers has a high proportion of heavy oil. It is considered an optimal feedstock for domestic refiners because it can be upgraded into high value-added products through advanced refining facilities. In contrast, crude from Kazakhstan contains more light oil, resulting in higher yields of gasoline and naphtha but relatively lower output of diesel and kerosene. However, industry officials explain that these characteristics can be adequately managed by blending it with heavy crude. They add that this approach reflects the reality that securing volumes quickly is more critical at the moment than the specific properties of the crude.
A source in the refining industry commented, "At a time when we need to secure every additional barrel of crude, we are grateful for the government’s success in obtaining crude oil and naphtha supplies." The source added, "Companies will also continue to seek alternative crude sources to ensure a stable supply of petroleum products in the domestic market."
Operating rates at naphtha cracking centers (NCCs) have also fallen sharply. The industry’s average utilization rate has dropped from around 80% before the Iran crisis to the 50–60% range recently. Some companies, including Yeochun NCC Co., Ltd., have seen a modest recovery from the 50% range to about 60%, but this still represents a steep decline compared with pre-war levels. There is growing expectation that the newly secured naphtha supplies will help support a rebound in operating rates.
A representative of the petrochemical industry stated, "The shortage of plastic feedstock has caused significant anxiety not only among petrochemical companies but also across downstream sectors such as healthcare and construction." The representative went on to say, "These measures should help ease some of those concerns. The additional import volumes will help us hold out in the short term, and companies will continue working to secure spot cargoes."

solidkjy@fnnews.com Gu Ja-yoon Reporter