
South Korea's third largest refiner, S-Oil Corp, has suspended production of several processing units after a blast at its Onsan refinery, it said on Friday, a step that could tighten gasoline supplies and boost refiners' margins in Asia.
S-Oil, a key exporter of products that is majority owned by Saudi Aramco, has suspended outputs at the units in the city of Ulsan as a precaution since they were near the resulting fire, the company added in a regulatory filing.
These are its No.2 alkylation unit and nearby processing units, such as the No.2 residue fluidized catalytic cracking (RFCC) unit and the No. 2 paraxylene (PX) unit, it said.
"We are exploring best solutions to make sure this does not cause any interruption in domestic supply of fuel products," Chief Executive Hussain Al-Qahtani told a news conference.
The company will make full use of inventory and its domestic and overseas network in that effort, he added.
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The shutdown following Thursday night's blast that killed one person is expected to affect already tight gasoline supplies in Asia, where S-Oil is a key exporter.
It may push up Asian refiners' margins of the fuel, already hovering near an all-time high of close to $34 a barrel.
S-Oil runs two alkylation units, with a combined capacity of 9,200 bpd, to produce alkylates that are blended with gasoline to boost its octane levels and quality.
Citi analysts expect S-Oil's gasoline output to be "severely impacted" in the near term, although it could buy alkylate to maintain production.
It may take up to two years to replace the fire-hit unit, during which time S-Oil could export Very Low Sulphur Fuel Oil, the bank's analysts said in a note.
One person died and nine were injured in the blast, an Ulsan fire official said on Friday.
(Reporting by Arpan Varghese, Joyce Lee and Heekyong Yang; Editing by Florence Tan and Clarence Fernandez)
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