South Korea refiners rush to upgrade heavy oil

South Korea’s oil refiners have stepped up efforts to build heavy oil upgraders, which they said would boost oil product exports and expand their earnings on the back of growing cracking margins. GS Caltex, the country’s second-largest oil refiner, started commercial production early this month at its third heavy oil upgrader, a vacuum residue hydrocracker (VHCR) with a capacity of 60,000 barrels per day (bpd). The VHCR at the refiner’s complex in Yeosu on the south coast is the first of its kind built in South Korea and the seventh in the world, according to company officials. GS Caltex has spent 2.6 trillion won (US$2.3 billion) on this unit, the company’s biggest investment, on a hydrocracker since October 2008. But GS Caltex will be overtaken by third-largest refiner Hyundai Oilbank in terms of heavy oil upgrading when the latter starts production in July at its new residue fluid catalytic cracker with a capacity of 52,000 bpd. Hyundai Oilbank’s heavy oil upgrading rate will climb to 30% next year, from 16.7%, compared with GS Caltex’s 28.7%. (October 8, 2010)