Oil Industry Faces 5 Trillion Won Deficit Due to COVID-19... "Performance Recovery Expected to Be Fast This Year"

▲A view of the Nexlene plant within SK Innovation's Ulsan Complex, the largest oil refining company in Korea

[Asia Economy Reporter Hwang Yoon-joo] The four major oil refining companies recorded a combined operating loss of 5 trillion won last year due to the impact of COVID-19, marking the largest operating loss in history. Although the refining industry showed signs of recovery after the first quarter, it failed to surpass the threshold in the fourth quarter. This year, with vaccine rollouts ahead, rising oil prices, and reduced supply, performance is expected to improve.

According to the industry on the 10th, the total operating loss of the four major oil refiners last year amounted to 5.169 trillion won. SK Innovation suffered the largest loss at 2.5688 trillion won, followed by S-OIL at 1.087 trillion won, GS Caltex at 919.2 billion won, and Hyundai Oilbank at 593.3 billion won.

The main cause of the record-breaking deficit was the sharp decline in oil demand due to the COVID-19 pandemic. All four refiners incurred significant losses in their refining businesses, and their chemical businesses also recorded losses, dragging down overall performance. In fact, the consumption of major products such as diesel and gasoline last year was 163.84 million barrels and 80.951 million barrels, respectively, representing decreases of 4.2% and 2.1% compared to the previous year.

As a result, after recording massive losses in the first half due to the COVID-19 shock, the industry showed signs of recovery in the third quarter but collapsed again in the fourth quarter. By segment, the refining business alone saw SK Innovation turn to a loss of 2.2228 trillion won, GS Caltex 95.2 billion won, and S-OIL 89.7 billion won.

This year, there are forecasts that performance will recover faster than expected.

An industry official said, "Last year, refinery expansions were limited due to COVID-19, and supply will be restricted this year due to production cut agreements among oil-producing countries such as OPEC. Meanwhile, consumption could recover rapidly with vaccine rollouts," adding, "In this case, the speed of performance recovery in the refining industry will accelerate."

This content was produced with the assistance of AI translation services.