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Total refinery output is expected to drop in South Korea this month due to maintenance work at one of its refineries, Reuters reports.

The country's four refiners - SK Energy, GS Caltex, S-Oil and Hyundai Oilbank - are expected to reduce total crude operation rates by 90,000 barrels per day (bpd) this month, from 2.26 million bpd in July to 2.17 million bpd in August. The refineries will therefore be operating at 78 percent of their maximum capacity.

The principal reason for the drop in output is mainly due to a month-long shutdown at GS Caltex's 130,000 bpd crude distillation unit in Yeosu. The refinery, which when at full capacity is able to process 680,000 bpd, has reduced its operation rates whilst maintenance work is being carried out. August crude run rates are expected to reach only 530,000 bpd, down by 130,000 bpd from last month.

In contrast, Hyundai Oilbank and S-Oil Corp are reported to be planning an increase in crude operation rates following a recent improvement in fuel oil refining margins. S-Oil aims to raise its August crude run rates to 530,000 bpd from 510,000 in July, whilst Hyundai Oilbank plans to increase output by 20,000 bpd to 320,000 bpd.

Meanwhile, the country's leading refiner, SK Energy, has recently installed its new 60,000 bpd Residual Fluid Catalytic Cracker (RFCC) in June. With the RFCC now online, the company expects to be less influenced by volatile fuel oil cracks in the future and will therefore not have to make drastic cuts in crude runs.

SK Energy has a total refining capacity of 1,125 million bpd, operating a 850,000 bpd refinery in Ulsan and a 275,000 bpd facility in Inchon. The company supplies one third of South Korea's total fuel oil requirements, but its total output this year has been at below 80 percent of capacity on average due to poor fuel oil margins.

Predicted operation rates for SK Energy this month are 790,000 bpd, down from 800,000 bpd in July.