GS Caltex completes new plant

GS Caltex Corp. said yesterday it completed the construction of a new oil upgrading facility about two months ahead of the schedule, aiming to quickly tap soaring fuel demand in Asia.

The 1.5 trillion won ($1.6 billion) heavy oil upgrading plant will start production in October, the company said.

The nation`s second-largest refinery expects the new facility to return additional annual revenue of around 300 billion won.

The heavy oil upgrading plant is capable of converting low-quality oil into gasoline and jet fuels, which usually have bigger markups than heavy oil.

As crude oil prices have soared on demand from emerging economies, many refineries are rushing to build high-tech plants.

The new facility can transform 55,000 barrels of cheap Bunker-C oil into light oil of higher quality, raising total oil upgrading capacity to 145,000 barrels.

The price gap between the two products is around $25 per barrel.

GS Caltex`s investment came as major local refineries are beefing up production capacity through massive investment and acquisitions.

The companies have been enjoying record high profit margins and healthy bottom lines in recent years because other Asian countries lack oil refining facilities.

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Analysts forecast demand will continue to grow as neighboring countries such as China and India increasingly guzzle petroleum.

S-Oil Corp., the nation`s third largest refiner, sold its 28.4 percent stake to Hanjin Group early this year in a move to finance its 3.5 trillion won facility expansion.

SK Energy Co. also sized up its refining capacity last year through the acquisition of Inchon Oil Refinery. The takeover boosted SK`s daily refining capacity to above 1.1 million barrels.

Around half of the total output from Korean refineries is shipped abroad.



By Ko Kyoung-tae



(kkt@heraldm.com)