S. Korea oil product exports to Australia jump; exports to China slide

South Korea’s exports of oil products to its biggest market China have been declining due to the economic slowdown, but shipments to Australia have jumped due to dropping refining capacity.
South Korea shipped a total of 86.09 million barrels of oil products to China last year, down 6.3% from 91.91 million barrels in 2011. Shipments have continued to slip this year, marking a 24.1% drop year-on-year to 5.80 million barrels in January 2013, and a 1.3% drop to 7.15 million barrels in February, state-run Korea National Oil Corporation said.
China’s share of South Korea’s total oil exports also dropped, to 19.4% in 2012, from 22.5% in 2011. Its share was 15.1% in January and 19.9% in February.
In contrast, South Korea’s oil exports to Australia in 2012 more than doubled to 24.40 million barrels, compared with 11.72 million barrels in the previous year. In January, oil product shipments rose 43.9% year-on-year to 2.52 million barrels and in February more than doubled to 2.56 million barrels.
Australia’s share of South Korea’s oil product exports increased to 5.5% in 2012, from 2.9% the previous year. That share rose to 6.5% in January and 7.1% in February.
South Korean refiners attributed the increase in oil product exports to Australia to reduced refining capacity following the shutdown of refineries there due to weak margins.
“Australia’s refining facilities are mostly outdated and their productivity is low due to high labor costs,” said an official at the Korea Petroleum Association.
Most refineries in Australia have capacities of around 100,000 barrels per day. In comparison, South Korea’s top refiner SK Innovation’s Ulsan plant has a capacity of 840,000 bpd, while its Incheon plant has a capacity of 275,000 bpd. “But oil demand in Australia has been on the rise,” the official said.
Oil products shipped to Australia are mostly value-added light oil, such as gasoline and diesel fuel, produced at South Korea’s heavy oil upgraders.
“Australia imports low sulfur products under tough environmental regulations, and South Korea is one of a few exporters that can meet them, resulting in increased exports to Australia,” the official said.
In contrast, South Korea shipped a meager 0.44 million barrels of diesel fuel and no gasoline to China in February, according to KNOC. The bulk of South Korea’s exports to China are low-priced solvent, naphtha and Bunker-C oil.
Singapore emerged as South Korea’s second-biggest oil buyer in 2012, at 69.01 million barrels, up 13.5% from 60.79 million in 2011. South Korea exported 4.97 million barrels to Singapore in February, down 17.3% from a year earlier, while in January they increased 39.4% to 6.36 million barrels.
Exports to Japan fell 2.3% to 63.49 million barrels in 2012, from 65.01 million barrels in 2011. Its February shipments fell 8.5% year-on-year to 6.42 million barrels, while January shipments rose 62.4% to 9.72 million barrels.
(March 26, 2013)