South Korea's second-largest oil refiner GS Caltex said it has dropped plans to build a refining plant with GS Energy and Brazil's state-run oil firm Petroleo Brasileiro SA due to uncertainty over profitability. GS Caltex, with a 775,000 barrel-per-day (bpd) refining capacity, thinks its investment should focus on secondary units to extract higher value gasoline and diesel from heavy oils, its chairman Hur Dong-Soo told reporters on the sidelines of the World Energy Congress on Monday.
Such investments can run into billions of dollars, he said. "We decided not to go for the (Brazilian) project. We dropped it completely and so has GS Energy as we are not sure whether it is a profitable project," Hur said. GS Caltex is equally owned by Chevron Corp, the second-largest US oil company, and South Korea's GS Energy, owned by GS Holding. Hur said the company should focus on upgrading its domestic facilities to extract more value from residual fuels.
"It usually costs about 1 trillion won to build a 40,000 bpd facility. If we want to do 150,000-bpd, you can imagine how much it costs," he said. The refiner in March said it had completed a 53,000-bpd heavy oil upgrading unit worth 1.3 trillion Korean won ($1.21 billion), raising its gasoline and diesel output and boosting the refiner's heavy-oil upgrading capacity to 268,000 bpd. Hur also said the refiner will increase its diesel exports, without giving a target number. The main destination for its overall exports will continue to be China, he said.
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