South Korean refineries unscathed by typhoon, some oil product exports delayed
South Korea’s major refinery complex in the southeastern city of Ulsan has been largely unscathed by Typhoon Hinnamnor that hit the region early Sept. 6, though some light and middle distillate export shipments could be delayed, refinery sources and traders with direct knowledge of the matter said.
Southeastern tip of the Korean peninsula was hit by the typhoon with a central atmospheric pressure of 940 hectopascals with maximum winds of about 158-170 km/hour around 6 am local time, according to the Korea Meteorological Administration.
Tanker loading and discharge activity was largely put on hold as a precaution prior to the typhoon’s landfall in the southern and southeastern regions, while backup power was secured for stable refining operations, plant operation sources at SK Energy and S-Oil Corp. told S&P Global Commodity Insights.
The refinery sources said the damage assessments so far show minor impact on the overall refining operations and run rates should return to normal rapidly as the typhoon moves away from the country’s east coast in the afternoon.
Ulsan is home to some of the country’s major petroleum refining and petrochemical complexes. SK Innovation’s refining unit SK Energy produces various petroleum products at the Ulsan complex, which has a refining capacity of 840,000 b/d, while S-Oil operates the 669,0000 b/d Onsan refinery and chemical complex.
Meanwhile, South Korea’s second-biggest refiner GS Caltex, which operates the 800,000 b/d refining complex in the southern coastal city of Yeosu, said its facilities were hardly affected by the typhoon and most of its product tankers had moved to secure locations prior to its landfall.
Oil product exports
The discharge of a few crude oil tankers that arrived from the Middle East and the US could be delayed by 10 hours or more because of heavy rains, strong winds and high waves, while half a dozen oil product export cargoes bound for Japan and Southeast Asia could be delayed by 24 hours or more, light and middle distillate marketers at two South Korean refiners said.
Some naphtha cargoes bound for Japan may face slightly longer delays since Japanese oil terminals and ports have also been affected by adverse weather due to the typhoon, said a light distillate marketer at a South Korean refiner. The marketer declined to be identified due to the sensitive nature of corporate trading relationship.
“Several gasoline cargoes are currently on standby, ready to set sail to Singapore, but it may require several hours to get the greenlight from port authorities as winds and waves are still strong,” a middle distillate trader at another South Korean refiner told S&P Global.
South Korea, Asia’s major light and middle distillate product supplier, regularly supplies naphtha to neighboring Japan and China, while shipping large volumes of gasoline to the Southeast Asian market every trading cycle.
South Korea exported 7 million barrels of naphtha to China over January-July, up from 6.7 million barrels over the same period a year ago, latest data from state-run Korea National Oil Corp. showed. South Korea sold 6.2 million barrels of naphtha to Japan in the first seven months of 2022, down from 10 million barrels a year ago.
South Korea’s gasoline shipments to Singapore rose 3% over the period to 13.2 million barrels, according to KNOC data.
LNG terminals, POSCO steel plant
Apart from oil refineries, LNG terminals across South Korea’s southern regions are broadly expected to resume normal operations later in the afternoon following some precautionary measures over the past 48 hours.
GS Caltex said it was not impacted by the typhoon as its regasification terminal is located in Boryeong on South Korea’s west coast. The company said there could be some impact on its Gwangyang and Tongyoung terminals in the southern part of the country, but the full extent of the effect could not immediately be ascertained.
Meanwhile, steel maker POSCO said its Gwangyang LNG import and regasification terminal on the southwest coast is intact and normal operation should resume as the typhoon moves away.
However, fires broke out around 7 am at POSCO’s steel plant located in the southeastern city of Pohang, causing minor damage to its hot rolling facility and a stainless-steel facility, a company official said.
The fires have been extinguished now and POSCO said it is difficult to tell whether the incident was directly related to the typhoon. The company will assess the scale of the damage and the actual cause of the fire, the official said.