Q2 2026 S-Oil Corp Earnings Call

August 3, 2026

Speaker #1: Good morning. This is Esther Oil, RRT leader, HD Zhang. Before we begin, please note that Q2 2026 financial results are provisional and therefore subject to change according to outside independent external auditors' audit results.

HD Jong: Good morning. This is S-Oil IR Team Leader HD Jong. Before we begin, please note that Q2 2026 financial results are provisional and therefore subject to change according to outside independent external auditors' audit results. First, please refer to page five for Q2 2026 financial results. In Q2, the company posted sales revenue of KRW 11.3 trillion, up 26.8% Q-on-Q, driven by higher crude prices.

Speaker #1: First, please refer to page 5 for Q2 2026 financial results. In Q2, the company posted sales revenue of 11.3 trillion won up 26.8% Q1Q, driven by higher crude prices.

Speaker #1: Operating income was 965 billion, down 21.6% Q1Q, as the one-off impact of higher crude prices recognized in Q1 largely subsided. If you look at each business segment, operating income from the refining segment declined 49% Q1Q to 532.4 billion won, although global refining margins remained strong particularly for diesel and kerosene amid the Middle East conflict.

HD Jong: Operating income was KRW 965 billion, down 21.6% Q-on-Q, as the one-off impact of higher crude prices recognized in Q1 largely subsided. If you look at each business segment, operating income from the Refining Segment declined 49% Q-on-Q to KRW 532.4 billion. Although global refining margins remained strong, particularly for diesel and kerosene amid the Middle East conflict, operating income decreased Q-on-Q due to the reverse base effect from the one-off crude price benefit recognized in Q1.

Speaker #1: Operating income decreased Q1Q due to the reverse base effect from the one-off crude price benefit recognized in the first quarter. Although margins in the petrochemical segment improved slightly Q1Q, the segment turned into a loss due to inventory-related impact.

HD Jong: Although margins in the Petrochemical Segment improved slightly Q-on-Q, the segment turned into a loss due to inventory-related impact. Operating income from the Lube Segment rose 187% Q-on-Q to KRW 477.4 billion, driven by record high product spreads amid tight supply-demand conditions. As mentioned earlier, this represents the highest quarterly operating profit on record. For reference, the company recorded KRW 113.7 billion in inventory-related gains in Q2, most of which were generated by the Lube Segment. This was significantly lower than KRW 643.4 billion recorded in the previous quarter. In financial and other gains and losses, the company recorded net interest loss of KRW 66.6 billion and net foreign exchange loss of KRW 155.6 billion due to foreign exchange increase. Q2 income before tax and net income come in at KRW 705.5 billion and KRW 514.6 billion, respectively. Moving on to financial status.

Speaker #1: Operating income from the lube segment rose 187% Q1Q to 477.4 billion won, driven by record-high product spreads amid tight supply-demand conditions. As mentioned earlier, this represents the highest quarterly operating profit on record.

Speaker #1: For reference, the company recorded 113.7 billion won in inventory-related gains in Q2, most of which were generated by the lube segment. This was significantly lower than 643.4 billion won recorded in the previous quarter.

HD Jong: For reference, the company recorded KRW 113.7 billion in inventory-related gains in Q2, most of which were generated by the Lube Segment. This was significantly lower than KRW 643.4 billion recorded in the previous quarter.

Speaker #1: In financial and other gains and losses, the company recorded net interest loss of 66.6 billion won and net foreign exchange loss of 155.6 billion won due to foreign exchange increase.

HD Jong: In financial and other gains and losses, the company recorded net interest loss of KRW 66.6 billion and net foreign exchange loss of KRW 155.6 billion due to foreign exchange increase. Q2 income before tax and net income come in at KRW 705.5 billion and KRW 514.6 billion, respectively. Moving on to financial status.

Speaker #1: Q2 income before tax and net income come in at 705.5 billion won and 514.6 billion won respectively. We'll be allowed to financial status as of the end of Q2 2026.

HD Jong: As of the end of Q2 2026, the company held KRW 1.5 trillion in cash, while net Debt-to-Equity Ratio was 78.1%. Despite external market volatilities, the company continues to maintain sufficient liquidity and stable financial structure through competitive and timely financing at low interest rate to support smooth execution of Shaheen Project and proactive working capital management. EBITDA for H1 came in at KRW 2.1 trillion. Now, I'll go through market environment and outlook by each business segment. First, turning to the Refining Segment on page seven. As mentioned earlier, despite strong regional refining margins driven by the Middle East conflict, Q2 operating income from the Refining Segment declined Q-on-Q to KRW 532.4 billion, as the substantial inventory-related gains recognized in Q1 did not recur in Q2.

Speaker #1: The company held 1.5 trillion won in cash, while net was 78.1%. Despite external market volatilities, the company continues to maintain sufficient liquidity and stable financial structure through competitive and timely financing at low-interest rates to support smooth execution of Shine Project, and proactive work in capital management.

Speaker #1: EBITDA for the first half came in at 2.1 trillion won. Now I'll go through market environment and outlook by each business segment. First, turning to the refining segment on page 7.

HD Jong: Now, I'll go through market environment and outlook by each business segment. First, turning to the Refining Segment on page seven. As mentioned earlier, despite strong regional refining margins driven by the Middle East conflict, Q2 operating income from the Refining Segment declined Q-on-Q to KRW 532.4 billion, as the substantial inventory-related gains recognized in Q1 did not recur in Q2.

Speaker #1: As mentioned earlier, despite strong regional refining margins driven by the Middle East conflict, Q2 operating income from the refining segment declined Q1Q to 532.4 billion won, as the substantial inventory-related gains recognized in the first quarter did not recur in the second quarter.

Speaker #1: Turning to Dubai crude prices in the second quarter, prices remained above 100 dollars per barrel throughout April and May, as the Middle East conflict continued and the Strait of Hormuz remained closed.

HD Jong: Turning to Dubai crude prices in Q2, prices remained above $100 per barrel throughout April and May as the Middle East conflict continued and the Strait of Hormuz remained closed. However, following the temporary easing of the blockade in June, crude prices declined rapidly, with Dubai crude averaging $79.50 per barrel for the month. Since then, crude prices have continued to fluctuate sharply in line with developments in the conflict, and they're expected to remain highly sensitive to geopolitical developments going forward. Asian refining margins strengthened significantly in Q2 as tighter refined product supply relative to crude drove product spreads sharply higher. The market was supported by the start of the driving season, continued Ukrainian drone attacks on Russian refineries, and supply disruptions from the Middle East. Accordingly, the average kerosene and diesel spreads widened further Q-on-Q to around $62 per barrel.

Speaker #1: However, following the temporary easing of the blockade in June, crude prices declined rapidly with the Dubai crude averaging 79.5 dollars per barrel for the month.

Speaker #1: Since then, crude prices have continued to fluctuate sharply in line with developments in the conflict, and they are expected to remain highly sensitive to geopolitical developments going forward.

HD Jong: Since then, crude prices have continued to fluctuate sharply in line with developments in the conflict, and they're expected to remain highly sensitive to geopolitical developments going forward. Asian refining margins strengthened significantly in Q2 as tighter refined product supply relative to crude drove product spreads sharply higher. The market was supported by the start of the driving season, continued Ukrainian drone attacks on Russian refineries, and supply disruptions from the Middle East. Accordingly, the average kerosene and diesel spreads widened further Q-on-Q to around $62 per barrel.

Speaker #1: Asian refining margins strengthened significantly in Q2 as tighter refined product supply relative to crude drove product spreads sharply higher. The market was supported by the start of the driving season continued Ukrainian drone attacks on Russian refineries, and supply disruptions from the Middle East.

Speaker #1: Accordingly, the average kerosene and diesel spreads widened further Q1Q to around 62 US dollars per barrel. Gasoline spreads also increased Q1Q with the onset of the driving season, reaching 25.6 US dollars per barrel in Q2.

HD Jong: Gasoline spreads also increased Q-on-Q with the onset of the driving season, reaching $25.6 per barrel in Q2. Tight market environment is expected to persist in Q3 amid ongoing crude and product supply disruptions. The driving season remains underway, while Europe is expected to increase demand for diesel used in power generation due to heat waves. As continued Ukrainian drone attacks on Russian refineries, Russia's export restrictions on products such as jet fuel and diesel are expected to keep major product markets tight. However, geopolitical developments are expected to influence the strength of product spreads in H2. A more detailed outlook for H2 will be provided in the key business update section with supporting data. Next is Petrochemical business segment. In Q2, Petrochemical business segment posted an operating loss of KRW 44.8 billion although margins improved somewhat, supported by higher PO spreads.

Speaker #1: Tight market environment is expected to persist in Q3 amid ongoing crude and product supply disruptions. The driving season remains underway, while Europe is expected to increase demand for diesel used in power generation due to heatwaves.

Speaker #1: Also, as continued Ukrainian drone attacks on Russian refineries, Russia's expert restrictions on products such as jet fuel and diesel are expected to keep major product markets tight.

Speaker #1: However, geopolitical developments are expected to influence the strength of product spreads in the second half of the year. A more detailed outlook for the second half will be provided in the key business update section with supporting data.

Speaker #1: Next is petrochemical business segment. In Q2, petrochemical segment posted an operating loss of 44.8 billion won, although margins improved somewhat supported by higher PO spreads.

Speaker #1: Inventory-related gains turned into losses from the previous quarter. Let me now discuss the market environment in Q2. In April and May, TX spreads narrowed to around 200 US dollars per ton on average, as feedstock NAFTA prices surged following the Middle East conflict, while TX prices failed to keep pace with the increase in NAFTA prices.

HD Jong: Inventory-related gains turned into losses from the previous quarter. Let me now discuss the market environment in Q2. In April and May, PX spreads narrowed to around $200 per ton on average as feedstock naphtha prices surged following the Middle East conflict, while PX prices failed to keep pace with the increase in naphtha prices. However, in June, naphtha prices stabilized following the easing of the Strait of Hormuz blockade, allowing PX spreads to recover to the $350 per ton range. As a result, the average PX spreads for Q2 came in at $251 per ton. For benzene, lower operating rates at major facilities due to naphtha supply disruptions, together with the resumption of Korean benzene exports to the US, helped improve the regional supply-demand balance. As a result, the average benzene spreads for Q2 increased by $20 Q1 to $139 per ton.

Speaker #1: However, in June, NAFTA prices stabilized, following the easing of the Strait of Hormuz blockade. Allowing TX spreads to recover to the 350 US dollars per ton range.

Speaker #1: As a result, the average TX spreads for Q2 came in at 251 US dollars per ton. For benzen, lower operating rates at major facilities due to NAFTA supply disruptions together with the resumption of Korean benzen experts to the US helped improve the regional supply demand balance.

Speaker #1: As a result, the average benzen spreads for Q2 increased by 20 US dollars Q1Q to 139 US dollars per ton. For olive fin downstream products, the average PP spreads over propylene improved to 29 US dollars per ton in Q2.

HD Jong: For olefin downstream products, the average PP spreads over propylene improved to $29 per ton in Q2. For PO, the market remained strong as lower operating rates caused by feedstock supply disruptions following the Middle East conflict, together with pre-buying demand from downstream customers concerned about supply shortages, supported the prices. As a result, the average PO spreads over propylene widened to $351 per ton in Q2. Let me discuss the outlook for the petrochemical segment in Q3. For aromatics, supply is expected to decline as planned maintenance shutdowns at Chinese facilities originally scheduled for Q2 have been postponed to Q3, resulting in lower operating rates. However, market conditions are likely to remain volatile, depending on the timing of plant restarts and the pace of downstream demand recovery. If geopolitical tensions persist, volatility in feedstock supply and prices, including naphtha and propylene, is also expected to continue.

Speaker #1: For PO, the market remained strong as lower operating rates caused by feedstock supply disruptions following the Middle East conflict together with pre-buying demand from downstream customers concerned about supply shortages supported the prices.

Speaker #1: As a result, the average PO spreads over propylene widened to 351 US dollars per ton in Q2. Let me discuss the outlook for the petrochemical segment in Q3.

Speaker #1: For aromatics, supply is expected to decline as planned maintenance shutdowns at Chinese facilities originally scheduled for Q2 have been postponed due to Q3, resulting in lower operating rates.

Speaker #1: However, market conditions are likely to remain volatile depending on the timing of plant restarts and the pace of downstream demand recovery. If geopolitical tensions persist, volatility in feedstock supply and prices including NAFTA and propylene is also expected to continue.

Speaker #1: For olive fin, downstream products, PB is expected to remain weak amid continued regional supply growth from new capacity additions. Meanwhile, for PO, spreads are expected to moderate as supply recovers from the previous quarter and seasonal demand weakens.

HD Jong: For olefin downstream products, PP is expected to remain weak amid continued regional supply growth from new capacity additions. Meanwhile, for PO, spreads are expected to moderate as supply recovers from the previous quarter and seasonal demand weakens. Next is Lube business segment. Operating income from the Lube segment reached a record high for KRW 177.4 billion in Q2. LBO market remained strong across all grades due to supply disruptions in the Middle East, with particularly tight market conditions for Group III base oil. Direct product disruptions at Middle East facilities, together with logistics constraints caused by the closure of the Strait of Hormuz, drove a sharp increase in LBO prices. As a result, LBO spreads increased by approximately $90 per barrel Q-on-Q to a record high $139.7 per barrel. High supply-demand conditions are expected to persist in Q3 as supply disruptions continue.

Speaker #1: Next is loop business segment. Operating income from the loop segment reached a record high 477.4 billion won in Q2. LBO market remained strong across all grades due to supply disruptions in the Middle East, with particularly tight market conditions for Group 3 base oil.

Speaker #1: Direct product disruptions at Middle East facilities together with logistics constraints caused by the closure of the Strait of Hormuz drove a sharp increase in LBO prices.

Speaker #1: As a result, LBO spreads increased by approximately 90 US dollars per barrel Q1Q to a record high 139.7 US dollars per barrel. Tight supply demand conditions are expected to persist in Q3 as supply disruptions continue.

Speaker #1: A more detailed explanation will be provided in the key business update section. Next is key business update. First, let me walk you through the supply and demand outlook.

HD Jong: A more detailed explanation will be provided in the Key Business Update section. Next is Key Business Update. First, let me walk you through the supply and demand outlook. The Middle East conflict continues to affect global crude oil and refined product markets. Geopolitical tensions in the Strait of Hormuz and the Red Sea have disrupted crude oil transportation, leaving global crude inventories at historically low levels. Refined product inventories have also remained at historically low levels due to the blockade of the Strait of Hormuz and operational disruptions at refineries in the Middle East and Russia. With both crude oil and refined product inventories remaining at low levels, tight supply-demand conditions continue to persist. Despite US refineries operating at exceptionally high utilization rates in the mid-90% range during Q2, US gasoline inventories have fallen to historical low levels due to reduced imports amid tight market conditions.

Speaker #1: The Middle East conflict continues to affect global crude oil and refined product markets. Geopolitical tensions in the Strait of Hormuz and the Red Sea have disrupted crude oil transportation, leaving global crude inventories at historically low levels.

Speaker #1: Refined product inventories have also remained at historically low levels due to the blockade of the Strait of Hormuz and operational disruptions at refineries in the Middle East and Russia.

Speaker #1: With both crude oil and refined product inventories remaining at low levels, tight supply demand conditions continue to persist. Despite US refineries, operating at exceptionally high utilization rates in the mid 90% range during Q2, US gasoline inventories have fallen to historical low levels due to reduced imports amid tight market conditions.

Speaker #1: In addition, as demand for diesel for power generation has increased, amid the European heat waves, Russia has expanded its expert restriction to include gasoline, jet fuel, and diesel following damage to its refining facilities.

HD Jong: As demand for diesel for power generation has increased amid the European heat waves, Russia has expanded its export restrictions to include gasoline, jet fuel, and diesel, following damage to its refining facilities. Meanwhile, refinery operations and exports in the Middle East continue to be disrupted due to blockade of the Strait of Hormuz following the Middle East conflict. As a result, tight supply-demand conditions are expected to continue affecting market conditions through at least the end of this year and into next year. Accordingly, global refining margins are expected to remain firm for the foreseeable future. LBO market is also being significantly affected, particularly for Group 3, as tight supply in the Middle East continues to intensify. The Middle East accounts for approximately 30% of global Group 3 base oil supply capacity, and as a result, Group 3 spreads have reached record high levels.

Speaker #1: Meanwhile, refinery operations and exports in Middle East continue to be disrupted due to blockade of the Strait of Hormuz following the Middle East conflict.

Speaker #1: As a result, tight supply demand conditions are expected to continue affecting market conditions throughout at least the end of this year and into next year.

Speaker #1: Accordingly, global refining margins are expected to remain firm for the foreseeable future. LBO market is also being significantly affected particularly for Group 3 as tight supply in the Middle East continues to intensify.

Speaker #1: The Middle East accounts for approximately 30% of global Group 3 base oil supply capacity and as a result, Group 3 spreads have reached record high levels.

Speaker #1: Given the disruptions to Middle Eastern LBO production facilities, the current supply tightness is expected to persist for an extended period even after the Strait of Hormuz reopens.

HD Jong: Given the disruptions to Middle Eastern LBO production facilities, the current supply tightness is expected to persist for an extended period even after the Strait of Hormuz reopens. More than 35% of the company's LBO production capacity consists of Group 3 products. Accordingly, the current strength in the LBO market is having a meaningful impact on our earnings. Based on current inventory levels and supply-demand conditions, the company expects market conditions for the refining and lube businesses to remain firm throughout H2. Last is the progress of Shaheen Project. The company is currently verifying mechanical completion through site inspections, equipment performance checks, and reviews of submitted documents to verify whether the requirements for mechanical completion have been met. At the same time, pre-commissioning and commissioning activities are underway, with a startup scheduled to follow and commercial operation targeted for earlier next year.

Speaker #1: More than 35% of the company's LBO production capacity consists of Group 3 products. Accordingly, the current strength in the LBO market is having a meaningful impact on our earnings.

Speaker #1: Based on current inventory levels and supply demand conditions, the company expects market conditions for the refining and loop businesses to remain firm throughout the second half of the year.

Speaker #1: Last is the progress of Shine Project. The company is currently verifying mechanical completion through site inspections equipment performance checks and reviews of submitted documents.

Speaker #1: To verify whether the requirements for mechanical completion have been met. At the same time, pre-commissioning and commissioning activities are underway. With the startup scheduled to follow and commercial operation targeted for earlier next year.

Speaker #1: On the marketing side, annual supply agreements for olive fin monomers have been secured with customers while additional contracts are being pursued to expand the customer base.

HD Jong: On the marketing side, annual supply agreements for olefin monomers have been secured with customers, while additional contracts are being pursued to expand the customer base. Customer pipelines have also been completed, and commissioning is planned in line with Shaheen startup. For PE, quality evaluations are being conducted through pre-marketing, while marketing efforts are underway for early securing key domestic customers. We will keep you updated on the progress of Shaheen Project. This concludes our presentation. Thank you. Now Q&A session will begin. Please press asterisk and one. That is asterisk one if you have any questions. For cancellation, please press asterisk two. That is asterisk and two on your phone. The first question will be given by Shin Hong Ju from Shinyoung Securities. Please go ahead.

Speaker #1: Customer pipelines have also been completed and commissioning is planned in line with Shine's startup. For PE, quality evaluations are being conducted through pre-marketing while marketing efforts are underway for early securing key domestic customers.

Speaker #1: We will keep you updated on the progress of Shahin Project. This concludes our presentation. Thank you.

Speaker #2: 这个回答其实应该被 시작하겠습니다. 질문이 있으신 분들은 전화기 버튼에 별표와 1번을 눌러주십시오. 신청하신 질문을 취소하시려면 별표와 2번을 눌러주시면 됩니다.

Speaker #3: Now Q&A session will begin. Please press asterisk and 1. That is asterisk 1 if you have any questions. For cancellation, please press asterisk 2.

Operator: Now Q&A session will begin. Please press asterisk and one. That is asterisk one if you have any questions. For cancellation, please press asterisk two. That is asterisk and two on your phone. The first question will be given by Shin Hong Joo from Shinyoung Securities. Please go ahead.

Speaker #3: That is asterisk and 2 on your phone.

Speaker #2: 처음으로 질문해 주실 분은 신영증권의 신홍주 님입니다. 질문해 주십시오.

Speaker #3: The first question will be given by Shin Hongju from Shinyoung Securities. Please go ahead.

Speaker #4: 네, 안녕하세요. 신영증권 신홍주 연구원입니다. 질문 기회 주셔서 감사하고 또 세 가지 질문 있습니다. 우선 첫 번째는 하반기 정유업황 어떻게 보시는지 그리고 홍해 운송 루트 폐쇄 등 지정학적 리스크 확대에 대한 회사의 원유 조달 등 대응 방안 공유 부탁드리고요.

Speaker #4: 두 번째로는 이란 전쟁 우크라이나 러시아 정제 설비 파괴 등 이런 글로벌 정유 시설 차질 규모 그리고 종전 이후의 수급 상황 전망 등 회사에서 파악되시는 부분 있으시면 공유 부탁드립니다.

Shin Hong Ju: 두 번째로는 이란 전쟁, 우크라이나, 러시아 정제설비 파괴 등 이런 글로벌 정유시설 차질 규모, 그리고 종전 이후 수급 상황 전망 등 회사에서 파악되신 부분 있으시면 공유 부탁드립니다. 그리고 마지막으로는 올해, 내년 CapEx 계획 공유 부탁드리겠습니다. 이상입니다.

Shin Hong Joo: 두 번째로는 이란 전쟁, 우크라이나, 러시아 정제설비 파괴 등 이런 글로벌 정유시설 차질 규모, 그리고 종전 이후 수급 상황 전망 등 회사에서 파악되신 부분 있으시면 공유 부탁드립니다. 그리고 마지막으로는 올해, 내년 CapEx 계획 공유 부탁드리겠습니다. 이상입니다.

Speaker #4: 그리고 마지막으로는 올해 내년 TEXT 계획 공유 부탁드리겠습니다. 이상입니다.

Speaker #1: So good morning. I have three questions and thank you for the opportunity to pose my questions. First is your outlook on the refining business and the second half of the year.

[Company Representative] (S-Oil): Good morning. I have three questions. Thank you for the opportunity to pose my questions. First is your outlook on the refining business in H2. How will the company respond to the escalating geopolitical risks in the Middle East, mainly a possible closure of the shipping route in the Red Sea? How are you going to counter these risks in terms of crude oil? My second question has to do with your understanding and market intel on the global refining facilities destruction caused by the war in Iran and Ukraine's drone attacks against refining facilities in Russia. How do you expect the overall market supply and demand conditions to evolve after the end of the war? My third question is your CapEx plan for this year and in 2027. Thank you.

Speaker #1: And how will the company respond to the escalating geopolitical risks in the Middle East, mainly a possible closure of the shipping route in the Red Sea?

Speaker #1: And how are you going to counter to these risks in terms of sourcing food? My second question has to do with the global your understanding and market intel on the global refining facilities destruction caused by the war in Iran.

Speaker #1: And Ukraine's drone attacks against refining facilities in Russia and how do you expect the overall market supply and demand conditions to evolve after the end of the war?

Speaker #1: My third question is your Capex plan for this year and 2027. Thank you.

Speaker #5: Yeah. 이번 첫 번째 질문 주신 부분에 대해서 답변드리겠습니다. 첫 번째 질문 중에서 우선 정유 제품 시황에 대해서 우선 간단히 말씀을 드리면 좀 전에 IR 팀장이 추석 발표에서도 언급한 바와 같이 정유 제품 마진이 현재 종합적으로 강세를 보이고 있습니다.

[Company Representative] (S-Oil): 첫 번째 질문 주신 부분에 대해서 답변드리겠습니다. 첫 번째 질문 중에서 우선 정유 제품 시황에 대해서 우선 간단히 말씀을 드리면, 좀 전에 IR 팀장이 실적 발표에서도 언급한 바와 같이 정유 제품 마진이 현재 종합적으로 강세를 보이고 있습니다. 중동 지역에서 제품 수출이 위축되어 있는 상황에서 우크라이나, 러시아 정제소의 드론 공격에 따른 러시아 시설의 차질, 그리고 러시아의 항공유 및 경유 수출 제한, 중국도 지금 수출을 제한하고 있는 공급 측면에서 있는 아주 큰 상황입니다.

Speaker #5: 중동 지역에서 제품 수출이 위축되어 있는 상황에서 우크라이나 러시아 정제 설비 드론 공격에 따른 러시아 시설의 차질 그리고 러시아의 항공격리 수출 제한 중국도 지금 수출을 제한하고 있는 공급 측면에서 영향이 아주 큰 상황입니다.

Speaker #1: So to answer your first question on the refining market conditions and the second half of the year, as was also explained by the IR team leader, the overall margin is very strong for a number of reasons.

[Company Representative] (S-Oil): To answer your first question on the refining market conditions in H2. As was also explained by the IR team leader, the overall margin is very strong for a number of reasons. First of all, we are seeing exports from the Middle East being contracted because of the war. The Russian refining facilities are also disrupted because of the drone attacks from Ukraine. This subsequently moved the Russian government to impose restrictions on jet fuel and diesel exports. China is also restricting exports of refined products.

Speaker #1: First of all, we are seeing exports from the Middle East being contracted because of the war. And the Russian refining facilities are also disrupted because of the drone attacks from Ukraine.

Speaker #1: And the subsequently moved the Russian government to impose restrictions on jet fuel and diesel exports. And China is also restricting its exports of refined products.

Speaker #5: 이런 상황은 단기간에 해소되기는 어려울 것으로 보이고 중동의 시정학적 이슈가 해소되더라도 최소한 연말 길게는 2027년까지도 타이탄 수급 상황이 이어질 것으로 시장에서는 예상하고 있고 따라서 국제 경제 마진이 이런 강세 흐름은 하반기에도 이어질 가능성이 매우 높습니다.

[Company Representative] (S-Oil): 이란 상황은 단기간에 해소되기는 어려울 것으로 보이고, 중동의 지정학적 이슈가 해소되더라도 최소한 연말, 길게는 2027년까지도 타이트한 수급 상황이 이어질 것으로 시장에서는 예상하고 있고. 따라서 국제 정제마진의 이런 강세 흐름은 하반기에도 이어질 가능성이 매우 높습니다.

Speaker #1: So we don't expect these situation to clear itself in the short term. So even if the war comes to an end, we believe the strong refining margin trend will continue at least until the end of the year and even in 2027.

[Company Representative] (S-Oil): We don't expect this situation to clear itself in a short term. Even if the war comes to an end, we believe the strong refining margin trends will continue at least until the end of the year and even in 2027.

Speaker #5: 회사의 원유 조달 상황과 관련하여 간단히 말씀을 드리면 우선 전쟁 발발 이후로 호르무즈 통항이 제한된 상황에서 회사는 홍해 양부항 대체 선적을 통해 원유가 안정적으로 도입하였고 사람 보낸다 같은 비중동산 원유 도입의 병행 추진 아랍에미리트 푸자이랑의 원유 우회 도입 그리고 울산 내 사우디산 원유 저장되어 있는 사우디산 원유 도입 및 정부의 비축유 임차 등 다양한 대응책으로 문제없이 원유를 조달해오고 있습니다.

[Company Representative] (S-Oil): 회사의 원유 조달 상황과 관련하여 간단히 말씀을 드리면, 우선 전쟁 발발 이후로 호르무즈 해협 통항이 제한된 상황에서 회사는 홍해 얌부항 대체 선적을 통해 원유를 안정적으로 도입하였고, Shaheen, 후란다 같은 비중동산 원유 도입의 대행 추진, 아랍에미리트 후자이라항의 원유 우회 도입, 그리고 울산에 저장되어 있는 사우디산 원유 도입 및 정부의 비축유 임차 등 다양한 대책 대응책으로 문제없이 원유를 조달해 오고 있습니다.

Speaker #1: And in response to the company's food sourcing, due to disrupted by the war in Iran, we are actually coming up with various response measures to this.

[Company Representative] (S-Oil): In response to the company's crude sourcing disrupted by the war in Iran, we are actually coming up with various response measures to this. We have been securing crude through different shipping routes from the Yanbu port, and we've also utilized the non-Doha blend. We also secure crude oil from the Fujairah port as an alternative. We're also securing crude oil from Saudi crude oil stored in Ulsan, and we also lease the government stockpile oil. These are all the measures that we are working on in response to the crude sourcing.

Speaker #1: We have been securing food through a different shipping route from the Yanbu port. And we've also taken utilized the non-Desaharan blend. And we also secure crude oil from the Fujairah port as an alternative.

Speaker #1: And we're also securing crude oil from Saudi Arabia Saudi crude oil stored in Usan. And we also Southeast the government stockpile oil. So these are all the measures that we are working on in response to the crude sourcing.

Speaker #5: 최근 홍해 내 긴장이 심화되고 있기 때문에 공급 차질 리스크가 확대될 가능성이 있습니다. 당사는 홍해 통항 차질이 장기화될 가능성을 가정하여 다양한 수급 시나리오와 대응 방안을 사전에 검토하고 있습니다.

[Company Representative] (S-Oil): 최근 홍해는 긴장이 심화되고 있기 때문에 공급 차질 리스크가 확대될 가능성이 있습니다. 당사는 홍해 통항 차질이 장기화될 가능성을 가정하여 다양한 수급 시나리오와 대응 방안을 사전에 검토하고 있습니다. 이와 관련하여 수에즈 운하를 통한 우회 수송로를 택할 경우에 원유 도입 일정이 약 30일이 지연될 수 있는데, 이에 대해서는 정부의 비축 원유 임차 그리고 긴급 스팟 원유 활용 등 단계별로 대응 방안도 마련하고 있습니다.

Speaker #5: 이와 관련하여 수에즈 운하를 통한 우회 수송로를 택할 경우에 원유 도입 일정이 약 30일 지연될 수 있는데 이에 대해서는 정부의 비축 원유 임차 그리고 긴급 스팟 원유 활용 등 단계별로 대응 방안도 마련하고 있습니다.

Speaker #1: So again, we are using the detour shipping routes since the war broke out. And we're also looking to various supply scenarios and countermeasures under the assumption that there will be some disruptions in the shipping routes from the Red Sea.

[Company Representative] (S-Oil): Again, we are using the detour shipping routes since the war broke out, and we're also looking to various supply scenarios and countermeasures under the assumption that there will be some disruptions in the shipping route from the Red Sea. If we opt for the detour shipping route through the Suez Canal, this could delay the crude arrival to South Korea by about 30 days. We'll come up with various phase countermeasures, such as leasing the stockpile crude oil from the government and tapping into the spot of crude oil on a contingency basis.

Speaker #1: And if we opt for the detour shipping routes through this Red Canal, this could delay the crude arrival to South Korea by about 30 days.

Speaker #1: So we'll come up with various space countermeasures such as leasing the stockpile crude oil from the government and tapping into the spot crude oil on a contingency basis.

Speaker #5: 당사의 항우에 이런 원유 확보 상황에 맞추어서 홍해 통항 차질이 통항 차질 영향이 최소화될 수 있도록 관리해 나갈 수 있을 것입니다.

[Company Representative] (S-Oil): 당사는 향후에 이런 원유 확보 상황에 맞춰서 홍해 통항 차질 영향이 최소화될 수 있도록 관리해 나갈 수 있을 것입니다.

Speaker #1: So by doing so, we'll be able to minimize the impact of the disruptions in the shipping routes. Even if there are, again, disruptions in the shipping routes from the Red Sea.

[Company Representative] (S-Oil): By doing so, we'll be able to minimize the impact of the disruptions in the shipping routes, even if there are, again, disruptions in the shipping routes from the Red Sea. 두 번째 질문에 대해서 답변드리겠습니다. 러시아 정제설비의 경우 우크라이나의 지속되는 공격으로 인해 정제설비 가동에 상당한 차질이 있는 것으로 알려지고 있습니다. 7월 기준 러시아 정제설비는 정제 캐파의 약 40%가 타격을 입었으며, 가동률은 약 36%가량 차질이 있는 것으로 파악되고 있습니다. To answer your second question, we understand that there have been quite sizable disruptions in the operation and refining facilities in Russia because of Ukraine's continued drone attacks on Russia's refining facilities. As of July this month, about 40% of Russia's refining capacity has been hit by the drone attacks. In terms of utilization rate, it is equivalent to about 36%. 이에 따라서 러시아는 정유 제품 수출 금지를 발표하였습니다. 2월에는 항공유 수출 금지를 발표했으며 11월까지 적용될 예정입니다.

Speaker #3: 두 번째 질문에 대해서 답변드리겠습니다. 러시아 정부 설비의 경우 우크라이나에 지속되는 공격으로 인해 정제 설비 가동에 상당한 차질이 있는 것으로 알려지고 있습니다. 7월 기준 러시아 정제 설비는 정제 케파의 약 40%가 타격을 입었으며 가동률은 약 36%가량 차질이 있는 것으로 파악되고 있습니다.

Speaker #1: So to answer your second question, we understand that there have been quite sizable disruptions in the operation of refining facilities. In Russia, because of Ukraine's continued drone attacks on Russia's refining facilities, as of July this month, about 40% of Russia's refining capacity has been hit by the drone attacks.

Speaker #1: And in terms of the utilization rate, it is equivalent to about 36%.

Speaker #3: 이에 따라서 러시아는 정유 제품 수출 금지를 발표하였습니다. 6월에는 항공유 수출 금지를 발표했으며 11월까지 적용될 예정입니다. 휘발유와 경유는 수출 금지를 내년 1월까지로 연장한다고 최근 발표하였습니다.

[Company Representative] (S-Oil): 휘발유와 경유 수출 금지를 내년 1월까지로 연장한다고 최근 발표하였습니다. Subsequently, the Russian government made the announcement on banning the export of refined products. In June, they announced banning the export of jet fuel, which will continue until November this year. They also recently made the announcement that export ban of gasoline and diesel will be extended until January next year. 미국 이란 전쟁 관련해서는 정제설비의 타격 규모가 정확히 파악되지는 않습니다. 중동 지역 내 직접적인 타격, 그리고 중동으로부터의 원유 수급 차질에 따른 글로벌 가동률 등 간접적인 영향이 다 존재하는 상황입니다. In relation to the war in Iran, we cannot have a clear information on how much the facilities were damaged because there is direct attack on the refining facilities in the Middle East. Also the supply disruptions of crude oil from the Middle East had an indirect impact on the global utilization rate of the refineries.

Speaker #1: And subsequently, the Russian government made announcements on banning the exports of refined products in June. They announced banning the exports of kestrel which will continue until November this year.

Speaker #1: And they also recently made the announcement that export ban of gasoline and diesel will be extended until January next year.

Speaker #3: 미국 이란 전쟁 관련해서는 정제 설비의 타격 규모가 정확히 파악되지는 않습니다. 중동 지역 내에 직접적인 타격 그리고 중동으로부터의 원유 수급 차질에 따른 글로벌 가동률 등 간접적인 영향이 다 존재하는 상황입니다.

Speaker #1: And in relation to the war in Iran, we cannot have a clear information on how much the facilities were damaged because there is direct attack on the refining facilities in the Middle East.

Speaker #1: And also the supply disruptions of crude oil from the Middle East had an indirect impact on the global utilization rate of the refineries. To move away the attack은

Speaker #3: 정도는 기관 전망에 따르면 전쟁 직후 그 차질의 정도가 매우 컸으나 점진적으로 정상 가동될 것으로 전망하고 있습니다. 차질 규모는 7월에 약 1,230만 배럴 수준이며 10월에는 1,100만 배럴 내외로 차질 정도가 점차 해소될 것으로 예상되고 있습니다.

[Company Representative] (S-Oil): 중동 설비의 타격 정도는 기관 전망에 따르면 전쟁 직후 그 타격률 정도가 매우 컸으나 점진적으로 정상 가동될 것으로 전망하고 있습니다. 차질 규모는 7월에 약 일, 230만 배럴 수준이며, 10월에는 일 100만 배럴 내외로 타격 정도가 점차 해소될 것으로 예상되고 있습니다. 다만 호르무즈 및 홍해 봉쇄 상황에 따라서 변동될 수 있습니다. Based on the outlook from the institutions on the damage and the disruptions done to the refining facilities in the Middle East was very heavy right after the start of the war. However, they are expecting the facilities to gradually come back to the normal track. As for the size of disruption, it was roughly 2.3 million BD in July, but they believe that it will slowly clear down to 1 million BD in October this year. However, this is all subject to change depending on the situation in the Strait of Hormuz and the Red Sea.

Speaker #3: 다만 호르무즈 및 홍해 봉쇄 상황에 따라서 변동될 수 있습니다.

Speaker #1: So based on the outlook from the institutions, the damage and the disruptions done to the refining facilities in the Middle East was very heavy right after the start of the war.

Speaker #1: However, they are expecting the facilities to gradually come back to the normal track. As for the size of disruption, it was roughly 2.3 million BD in July.

Speaker #1: But they believe that it will clearly it will slowly clear down to 1 million BD in October this year. However, this is all subject to change depending on the situation in the Strait of Hormuz and the Red Sea.

Speaker #3: 종합하면 글로벌 정유 시설의 차질 정도는 여러 지역에서 나타나고 있고 이로 인해 재고 레벨도 과거에 적정 수준을 벗어나 있어서 시장이 이전 수준의 수급 상황으로 회복되는 데에는 시간이 소요될 것으로 보고 있습니다.

[Company Representative] (S-Oil): 종합하면 글로벌 정유 시설의 차질 정도는 여러 지역에서 나타나고 있고, 이로 인해 재고 레벨도 과거의 적정 수준을 벗어나 있어서 시장이 이전 수준의 수급 상황으로 회복되는 데에는 시간이 소요될 것으로 보고 있습니다. To sum up, the global refining facilities are disrupted, but they vary to some degree from one region to another. Subsequently, the inventory level is also off the normal level compared to the past, and therefore it will take time before the market comes back to the pre-war supply conditions. 이상입니다. 추가로 질문하실 내용 있나요?

Speaker #1: So to sum up, the global refining facilities are disrupted but they vary to some degree from one region to the another. And subsequently, the inventory level is also off the normal level compared to the past.

Speaker #1: And therefore, it will take time before the market comes back to the pre-war supply conditions.

Speaker #3: 감사합니다.

Speaker #1: That's all I have.

Speaker #5: 오케이. 마지막으로 KEPEX 관련된 질문 답변드리겠습니다. 현재 샤인 프로젝트가 순조롭게 진행되고 있기 때문에 금년도 KEPEX 규모에 대해서는 이미 공유드린 2.2조 1,000억 원 수준에서 진행할 예정입니다.

[Company Representative] (S-Oil): 네, 마지막으로 CapEx 관련된 질문 답변드리겠습니다. 현재 Shaheen 프로젝트가 순조롭게 진행되고 있기 때문에 금년도 CapEx 규모에 대해서는 이미 공유드린 2조 1천억 원 수준에서 진행할 예정입니다.

Speaker #1: So to answer your third question on the KEPEX outlook, this year as you know, the Shaheen project is progressing well. And as was shared with you earlier, other KEPEX for this year is 2.1 trillion won.

[Company Representative] (S-Oil): To answer your third question on the CapEx outlook. This year, as you know, the Shaheen Project is progressing well. As was shared with you earlier, their CapEx for this year is KRW 2.1 trillion.

Speaker #5: 금년 샤인 프로젝트가 마무리되고 나면 2027년에는 유지보수 등 경상 KEPEX 중심으로 집행할 예정이며 현재까지 계획된 2027년도 대규모 투자 계획은 없습니다.

[Company Representative] (S-Oil): 금년 Shaheen 프로젝트가 마무리되고 나면 2027년에는 유지 보수 등 정상 CapEx 중심으로 집행할 예정이며, 현재까지 계획된 2027년도 대규모 투자 계획은 없습니다.

Speaker #1: So this year we are going to wrap up Shaheen project. And in 2027, most of the KEPEX will be the ordinary KEPEX around maintenance and repair.

[Company Representative] (S-Oil): This year we are going to wrap up Shaheen Project, and in 2027, most of the CapEx will be the ordinary CapEx around maintenance and repair. We don't have any major investment plan for 2027 so far.

Speaker #1: And we don't have any major investment planned for 2027 so far.

Speaker #5: 현재 내년도 예산을 생성하고 있으며 구체적인 수단은 추후 확정되면 공유해 드리도록 하겠습니다.

[Company Representative] (S-Oil): 현재 내년도 예산을 편성하고 있으며, 구체적인 숫자는 추후 확정되면 공유해 드리도록 하겠습니다.

Speaker #1: And we are at the moment of setting the budget for 2027. And once the final numbers are out, we will share them with you.

[Company Representative] (S-Oil): We are at the moment of setting the budget for 2027, and once the final numbers are out, we will share them with you.

Speaker #5: 이상으로 답변 마치겠습니다.

Speaker #1: This concludes my answer in your third question.

[Company Representative] (S-Oil): 이상으로 답변 마치겠습니다.

[Company Representative] (S-Oil): This concludes my answer on your third question.

Speaker #2: 다음으로 질문해 주실 분은 삼성증권의 조현열 님입니다. 질문해 주십시오. The following question is by 조현열 from 삼성 Securities. Please go ahead.

Operator: 다음으로 질문해 주실 분은 삼성증권의 조현열 님입니다. 질문해 주십시오.

HD Jong: The following question is by Jo Hyun-yeol from Samsung Securities. Please go ahead.

HD Jong: The following question is by Hyunryul Cho from Samsung Securities. Please go ahead.

Speaker #5: 네. 안녕하세요. 삼성증권 조현열입니다. 질문 주셔서 감사드립니다. 크게 세 가지 질문을 드리도록 하겠습니다. 첫 번째로 아까 굉장히 많은 관련해서 말씀 주셨지만 특히 2월 달 이후로 지금 증강유 마진 공세가 굉장히 두드러지게 나타나는 것 같습니다.

Jo Hyun-yeol: 안녕하세요. 삼성증권 조현열입니다. 질문이 두어 가지 있습니다. 먼저 세 가지 질문을 드리도록 하겠습니다. 첫 번째로 아까 정제마진 관련해서 말씀드렸지만 특히 2월 이후로 지금 정제마진 경세가 굉장히 부드러워지게 나타나는 것 같습니다. 이에 대한 배경이랑 향후 지속 가능성에 대해서 말씀해 주시면 감사하겠습니다. 두 번째는 샤힌인데요. 아까 샤힌에 대한 가동 중단 간단하게 말씀해 주셨지만, 샤힌의 구체적인 사업 가동 시점 한 번 더 말씀 감사드리겠고, 최근에 울산 석유화학 그 구조조정 정책 관련해서 저희 샤힌은 없을지에 대해서 말씀해 주시면 감사하겠습니다. 세 번째는 전반적인 배당 관련 내용인데요. 최근에 실적 개선이 굉장히 부드러워지게 나타난다고 보는 상황이고, 이에 따라서 향후 차입금을 어느 정도까지 축소시킬 수 있을지, 그리고 이에 따라서 향후 배당을 다시 증가시킬 수 있는 시점이나 그 수준이 어떻게 될지에 대해서 말씀해 주시면 감사하겠습니다. 감사합니다.

Hyunryul Cho: 안녕하세요. 삼성증권 조현열입니다. 질문이 두어 가지 있습니다. 먼저 세 가지 질문을 드리도록 하겠습니다. 첫 번째로 아까 정제마진 관련해서 말씀드렸지만 특히 2월 이후로 지금 정제마진 경세가 굉장히 부드러워지게 나타나는 것 같습니다. 이에 대한 배경이랑 향후 지속 가능성에 대해서 말씀해 주시면 감사하겠습니다. 두 번째는 샤힌인데요. 아까 샤힌에 대한 가동 중단 간단하게 말씀해 주셨지만, 샤힌의 구체적인 사업 가동 시점 한 번 더 말씀 감사드리겠고, 최근에 울산 석유화학 그 구조조정 정책 관련해서 저희 샤힌은 없을지에 대해서 말씀해 주시면 감사하겠습니다. 세 번째는 전반적인 배당 관련 내용인데요. 최근에 실적 개선이 굉장히 부드러워지게 나타난다고 보는 상황이고, 이에 따라서 향후 차입금을 어느 정도까지 축소시킬 수 있을지, 그리고 이에 따라서 향후 배당을 다시 증가시킬 수 있는 시점이나 그 수준이 어떻게 될지에 대해서 말씀해 주시면 감사하겠습니다. 감사합니다.

Speaker #5: 이에 대한 배경이랑 향후에 지속 가능성에 대해서 말씀 주시면 감사하겠습니다. 두 번째는 샤인인데요. 아까 샤인에 대한 가동성 간단하게 말씀 주시면 샤인의 구체적인 사업 가동 시장 한 번 더 언급 주시면 감사드리겠고 또 최근에 울산 석유화학 구조조정 정책 관련해서 저희 샤인은 업체 측에서 말씀 주시면 감사하겠습니다.

Speaker #5: 세 번째는 전반적인 배당 관련 내용인데요. 최근에 7개 업체에서는 굉장히 조금 두드러지게 나타난다고 있는 상황이고 이에 따라서 향후 차입금을 어느 정도까지 축소시킬 수 있을지 그리고 이에 따라서 향후에 배당을 다시 증가시킬 수 있는 시점이나 아니면 그 수준이 어떻게 될지에 대해서 말씀 주시면 감사하겠습니다.

Speaker #5: 감사합니다.

Speaker #1: So I have three questions. And thank you for the opportunity to pose questions. First is, what is the background behind the bullish of kerosene and diesel margins since June?

[Company Representative] (S-Oil): I have three questions. Thank you for the opportunity to pose questions. First is, what is the background behind the bullish of kerosene and diesel margin since June? What is your outlook on the sustainability of this margin situation? My second question has to do with Shaheen Project. You explained about Shaheen Project earlier when we began the earnings release. Could you just walk us through in a more detail about Shaheen Project and when it will go into commercial operation? Also, explain to us about the government's petrochemical structural policy in Ulsan and how this could affect the Shaheen Project. My third question has to do with the dividends. The company's performance has recently improved significantly. How much do you think that this will reduce the company's borrowing? Do you think this will also raise the company's dividend?

Speaker #1: And what is your outlook on the sustainability of this margin situation? My second question has to do with Shaheen project. You explained about Shaheen project in earlier when we began the earnings release.

Speaker #1: But could you just walk us through in a more detail about Shaheen project and when it will go into commercial operation? And also explain to us about the government's petrochemical restructuring policy in Ulsan and how this could affect the Shaheen project.

Speaker #1: My third question has to do with the dividends, the company's performance has recently improved significantly. How much do you think would this will reduce the company's borrowing?

Speaker #1: And do you think this will also raise the company's dividend? If so, when and by how much?

[Company Representative] (S-Oil): If so, when and by how much?

Speaker #3: 먼저 증경유 마진에 대해서 답변드리겠습니다. 증경유 마진은 공급 측면에서 여러 요인이 반영되면서 강세를 보이고 있습니다. 중동 지역에서 증경유 제품 수출이 위축되어 있는 상황 하에서 아시아에서 도입하고 있는 원유 성상이 라이트해짐에 따라서 가동률과 수율에 영향을 미치고 있고 이는 증경유 제품의 공급에도 영향을 주고 있습니다.

Operator: 먼저 등경유 마진에 대해서 답변드리겠습니다. 등경유 마진은 공급 측면에서 여러 요인이 반영되면서 강세를 보이고 있습니다. 중동 지역에서 등경유 제품 수출이 위축되어 있는 상황 하에서 아시아에서 도입하고 있는 원유 성상이 light 해짐에 따라서 가동률과 수율에 영향을 미치고 있고, 이는 등경유 제품의 공급에도 영향을 주고 있습니다.

Speaker #1: So to answer your first question, I believe there are a number of factors that are being reflected in the supply side of the supply side and also affecting the diesel and kerosene margin.

[Company Representative] (S-Oil): To answer your first question, I believe there are a number of factors that are being reflected in the supply side and also affecting the diesel and kerosene margin. The kerosene and diesel exports to the Middle East have been contracted because of the war. The refineries in Asia are sourcing lighter crude oil, which is affecting the overall utilization rate, the yield, and the overall supply of kerosene and diesel.

Speaker #1: The kerosene and diesel exports for the Middle East have been contracted because of the war. And the refineries in Asia are sourcing lighter crude oil.

Speaker #1: This is which is affecting the overall utilization rate and the yield. And the overall supply of kerosene and diesel.

Speaker #3: 또한 앞서 말씀드린 바와 같이 러시아 수출 제한에 이어서 중국 또한 수출을 제한하고 있기 때문에 증경유는 공급 측면에서의 영향이 큰 상황입니다. 이에 따라서 1분기 30불 후반이던 증경유 스프레드는 2분기에 60불대로 상승했고 7월에도 중증경부터 지정학적 이슈가 다시 불거지면서 스프레드가 확대돼서 현재 70불을 상회하고 있습니다.

Operator: 또한 앞서 말씀드린 바와 같이 러시아 수출 제한에 이어서 중국 또한 수출을 제한하고 있기 때문에 등경유는 공급 측면에서의 영향이 큰 상황입니다. 이에 따라서 1분기 $30불 후반이던 등경유 스프레드는 2분기에 $60불대로 상승했고, 7월에도 중순경부터 지정학적 이슈가 다시 불거지면서 스프레드가 확대되면서 현재 $70불을 상회하고 있습니다.

Speaker #1: And we are seeing quite sizable disruptions in Russia's refining facilities because of these things thrown attacks. And this is affecting their overall exports of kerosene and diesel.

[Company Representative] (S-Oil): We are seeing quite sizable disruptions in Russia's refining facilities because of different drone attacks, and this is affecting their overall exports of kerosene and diesel, and so is China, which is also restricting its exports as well. As a result, the kerosene and diesel spread, which was in the upper USD 30 level in Q1, had shot up to USD 60 level in Q2. As the geopolitical issues renewed from the middle of July, the spread further widened to over USD 70 at the moment.

Speaker #1: And so is China, which is also restricting its exports as well. As a result, the kerosene and diesel spread which was in the upper 30 level in Q1 had shot up to $60 level in Q2.

Speaker #1: And as the geopolitical issues renewed from the middle of July, the spread further widened to over $70 at the moment.

Speaker #3: 이러한 차질 상황은 단기간에 해소되기는 어려울 것으로 보이며 중단기적으로 이어질 것으로 예상이 되어서 증경유 마진의 예년 대비 강세 흐름은 하반기에도 이어질 가능성이 높을 것으로 보고 있습니다.

Operator: 이러한 차질 상황은 단기간에 해소되기는 어려울 것으로 보이며 중장기적으로 이어질 것으로 예상이 되어서 등경유 마진의 예년 대비 강세 흐름은 하반기에도 이어질 가능성이 높을 것으로 보고 있습니다.

Speaker #1: So we do not think this disruptive situation will clear itself in the short term. It is likely to continue in the mid to mid term.

[Company Representative] (S-Oil): We do not think this disruptive situation will clear itself in the short term. It is likely to continue in the midterm, and therefore we are expecting this bullish trend to continue towards H2.

Speaker #1: And therefore we're expecting this bullish trend to continue towards the second half of the year.

Speaker #5: 네. 두 번째 질문 주신 사항에 대해서 답변드리겠습니다. 아까 발표에서도 말씀드린 바와 같이 샤인 프로젝트는 현재 내년 초 상업 가동을 목표로 준비 중에 있습니다.

[Company Representative] (S-Oil): 두 번째 질문 주신 사항에 대해서 답변드리겠습니다. 아까 발표에서 말씀드린 바와 같이 샤힌 프로젝트는 현재 내년 초 상업 가동을 목표로 준비 중에 있습니다.

Speaker #1: To answer your question on this on Shaheen project, as was presented to you earlier, Shaheen project's target commercial operation is early 2027.

[Company Representative] (S-Oil): To answer your question on Shaheen Project. As was presented to you earlier, Shaheen Project's target commercial operation is early 2027.

Speaker #5: 또 준비 과정을 좀 추가적으로 설명을 드리면 2월 30일 기준으로 샤인 프로젝트 건설사는 당사에 비교적 준공 관련 자료를 제출했고 당사는 비교적 준공을 위한 계약상 요구 조건들에 충족 여부를 확인하기 위해 현장 확인, 설비 성능 및 제출 자료 검증을 하는 작업을 현재 진행 중입니다.

[Company Representative] (S-Oil): 준비 과정을 추가적으로 설명을 드리면, 6월 30일 기준으로 샤힌 프로젝트 건설사는 당사에 기계적 준공 관련 자료를 제출했고, 당사는 기계적 준공을 위한 계약상 요구 조건들의 충족 여부를 확인하기 위해 현장 확인, 설비 성능 및 제출 자료 검증을 하는 작업을 현재 진행 중입니다. 메가 프로젝트인 관계로 검증은 유닛별로 나누어 순차적으로 진행하고 있습니다.

Speaker #5: 메가플렉스인 관계로 검증은 유닛별로 나누어 순차적으로 진행하고 있습니다.

Speaker #1: So to walk you through our preparations, on July on June 30th, the EPC contractors have submitted to the company the documents related to the mechanical completion.

[Company Representative] (S-Oil): To walk you through our preparations. On 30 June, the EPC contractors have submitted to the company the documents related to the mechanical completion, and we are now in the process of checking the process of field inspection and verifying the performance of the equipment and also verifying the documents submitted by the EPC contractors to check whether the contractual requirements needed for mechanical completion have been met or not.

Speaker #1: And we are now in the process of checking the process of field inspection and verifying the performance of the equipment. And also verifying the documents submitted by the EPC contractors to check whether the contractual requirements needed for mechanical completion have been met or not.

Speaker #5: 이와 동시에 예비 시운전과 시운전 과정이 진행되고 있고 4분기 중 스타트업을 완료하고 나면 말씀드린 바와 같이 계획대로 내년 초 상업 가동을 실시할 예정입니다.

[Company Representative] (S-Oil): 그와 동시에 예비 시운전과 시운전 과정이 진행되고 있고, 4분기 중 startup을 완료하고 나면 말씀드린 바와 같이 계획대로 내년 초 상업 가동을 실시할 예정입니다.

Speaker #1: Given the fact that this is a mega project, we are doing the verification on unit by unit and step by step. And in parallel with this, we are also in the process of pre-commissioning and commissioning work.

[Company Representative] (S-Oil): Given the fact that this is a mega project, we are doing the verification work unit by unit and step by step. In parallel with this, we are also in the process of pre-commissioning and commissioning work. Our plan is to complete the commissioning and the startup in Q4 of this year. As I said earlier, we are going to go into commercial operations from early 2027.

Speaker #1: Our plan is to complete the commissioning and the startup in the fourth quarter of this year. And as I said earlier, we are going to go into commercial operations from early 2027.

Speaker #5: 우리사 석유와 구조조정과 관련해서는 당사는 기본적으로 정부의 석유화학 산업 경쟁력 강화 정책에 적극 공감하며 정부의 구조조정 정책에도 적극적으로 협력을 이어가고 있습니다. 다만 구조조정안 도출 관련해서는 현재 일정이 다소 지연되고 있는 상황입니다.

[Company Representative] (S-Oil): 울산 석유화학 구조조정과 관련해서는 당사는 기본적으로 정부의 수리 및 산업 경쟁력 강화 정책에 적극 공감하며, 정부의 구조조정 정책에도 적극적으로 협력을 이어가고 있습니다. 다만 구조조정안 도출 관련해서는 현재 일정이 다소 지연되고 있는 상황입니다.

Speaker #1: And speaking of the petrochemical restructuring in Ulsan, the company fully is fully aligned with the government's policies to make the petrochemical industry more competitive.

[Company Representative] (S-Oil): Speaking of the petrochemical restructuring in Ulsan, the company is fully aligned with the government's policy to make the petrochemical industry more competitive, and we are closely cooperating with the government's restructuring policy. However, we are seeing some delays in coming up with the restructuring solution.

Speaker #1: And we are closely cooperating with the government's restructuring policy. However, we are seeing some delays in coming up with the restructuring solution.

Speaker #5: 아시는 바와 같이 샤인 프로젝트의 시설은 시설 원가가 매우 낮아 높은 경쟁력을 보유하고 있는 상황에서 각사의 외관계가 다소 다른 상황이 이어지고 있습니다. 따라서 적합한 안을 도출하는 데는 시간이 다소 소요되고 있는 상황입니다.

[Company Representative] (S-Oil): 아시는 바와 같이 샤힌 프로젝트의 시설은 시설 원가가 매우 낮아 높은 경쟁력을 보유하고 있는 상황에서 각자의 이해관계가 다소 다른 상황이 이어지고 있습니다. 따라서 적합한 안을 도출하는 데는 시간이 다소 소요되고 있는 상황입니다.

Speaker #1: Well, as you know well, Shaheen project is very cost competitive, which means it will be a very competitive it will have very competitive facilities.

[Company Representative] (S-Oil): Well, as you know well, Shaheen Project is very cost competitive, which means it will have very competitive facilities. At the moment, the companies involved have different interests. It is taking some time before the companies involved are coming up with an appropriate solution.

Speaker #1: But at the moment, the companies involved have different interests. So it is taking some time before the companies involved are coming up with an appropriate solution.

Speaker #5: 당사는 샤인 프로젝트의 안전한 완공과 안정적인 가동을 위해 전사의 역량과 자원을 결집한 동시에 정부의 정책에도 적극적으로 협력하도록 하겠습니다.

[Company Representative] (S-Oil): 당사는 샤힌 프로젝트의 안전한 완공과 안정적인 가동을 위해 전사 역량과 자원을 결집한 동시에, 정부의 정책에도 적극적으로 협력하도록 하겠습니다.

Speaker #1: Going forward, the company will continue to avail all the company-wide resources and capabilities to ensure safe completion and stable operation of Shaheen project. And at the same time, we'll fully align ourselves with the government policies.

[Company Representative] (S-Oil): Going forward, the company will continue to avail all the company-wide resources and capabilities to ensure safe completion and stable operation of Shaheen projects, and at the same time will fully align ourselves to the government policy.

Speaker #5: 네. 다음은 실적 개선과 관련한 차입금 축소 내지는 배당금에 대해서 질문하셨는데요. 회사는 최근에 실적 개선에 따라서 조성된 재원을 당연히 차입금 규모 축소 등 재무 구조 개선과 배당의 합리적으로 분배해서 사용할 계획입니다.

[Company Representative] (S-Oil): 다음은 실적 개선과 관련한 차입금 축소 내지는 배당금에 대해서 질문하셨는데요. 회사는 최근의 실적 개선에 따라서 조성된 재원을 당연히 차입금 규모 축소 등 재무구조 개선과 배당에 합리적으로 분배해서 사용할 계획입니다.

Speaker #1: So to answer your third question on the company's plan to downsize the Darlings and any outlook on any plans to raise dividends based on the strong performance that the company has been reporting recently, well, so our plan is to strike a good balance between improving the company's financial structure by reducing the borrowing based on the strong earnings that we have been making recently, and also dividends.

[Company Representative] (S-Oil): To answer your third question on the company's plan to downsize the borrowings and any plans to raise dividends based on the strong performance that the company has been reporting recently. Well, our plan is to strike a good balance between improving the company's financial structure by reducing the borrowings based on the strong earnings that we have been making recently and also dividends.

Speaker #5: 다음은 구체적인 차입금 감축 수준에 대해서는 물론 샤힌 프로젝트가 거의 투자가 마무리되었고 되었지만 차입금은 유가 수준에 따른 운전자본 증감이나 이익 규모 등에 따라서 달라질 수 있기 때문에 현재로서는 구체적인 숫자를 말씀드리기는 어렵고 다만 회사가 장기적으로 목표로 하고 있는 자기 자금 대비 자기 자본 대비 차입금 비율, 즉 Equity Ratio를 80%에서 100% 수준으로 안정적으로 관리하는 걸 목표로 하고 있습니다.

[Company Representative] (S-Oil): 다만 구체적인 차입금 감축 수준에 대해서는, 물론 샤힌 프로젝트가 거의 투자가 마무리되었지만, 차입금은 유가 수준에 따른 운전자본 증감이나 이익 규모 등에 따라서 달라질 수 있기 때문에 현재로서는 구체적 숫자를 말씀드리기는 어렵고, 다만 회사가 장기적으로 목표로 하고 있는 자기자본 대비 차입금 비율, 즉 Debt-to-Equity Ratio를 80%에서 100% 수준으로 안정적으로 관리하는 걸 목표로 하고 있습니다.

Speaker #1: So as you know, investment into Shaheen project is now almost over is almost over. And however, how much we will reduce the borrowings will all depend on and will be subject to the company's income size and the working capital which is affected by the oil price.

[Company Representative] (S-Oil): As you know, investment into Shaheen Project is now almost over. However, how much we will reduce the borrowings will all depend on, and will be subject to, the company's income size and the working capital, which is affected by the oil price. However, in the long term, our plan is to keep the Debt-to-Equity Ratio in the range of 80% to 100%.

Speaker #1: However, in the long term, our plan is to keep the debt to equity ratio at in the range of 80 to 100 percent.

Speaker #5: 금년도 회사는 기회 안내해 드린 대로 배당 성향 20% 이상을 유지하는 할 계획이고 이에 따라 이익 증가 이익이 증가하면 배당금도 비례해서 늘어날 수 있을 것입니다.

[Company Representative] (S-Oil): 금년도 배당은 귀 안내해 드린 대로 배당성향 20% 이상을 유지하는 차일 계획이고, 이에 따라 이익이 증가하면 배당금도 비례해서 늘어날 수 있을 것입니다. 또한 내년 이후 배당성향에 대해서는 추후 배당 가이드라인을 수립해서 내년도에 다시 알려드리도록 하겠습니다.

Speaker #5: 또한 내년 이후 배당 성향에 대해서는 추후 배당 가이드라인을 수립해서 내년도에 다시 알려드리도록 하겠습니다.

Speaker #1: So for this year's dividend, it will be paid with the dividend payout ratio maintaining at 20% or above. However, when the companies' earnings go up, the dividend will also increase correspondingly.

[Company Representative] (S-Oil): For this year's dividend, it will be paid with the dividend payout ratio maintaining at 20% or above. However, when the company's earnings go up, the dividend will also increase correspondingly. As for the dividend payout ratio from 2027 and onwards, we are going to develop its guidelines, dividend guidelines in the future, and we will share them with you in 2027.

Speaker #1: As for the dividend payout ratio from 2027 and onwards, we are going to develop the guidelines dividend guidelines in the future. And we will share them with you in 2027.

Speaker #5: 이상으로 답변을 마치도록 하겠습니다.

Speaker #1: This concludes my answer.

[Company Representative] (S-Oil): 이상으로 답변을 마치도록 하겠습니다.

[Company Representative] (S-Oil): This concludes my answer.

Speaker #2: 다음으로 질문해 주실 분은 신원투자증권의 이진명 님입니다. 질문해 주십시오. The following question is by 이진명 from Shinhan Investment Securities. Please go ahead.

Operator: 다음으로 질문해 주실 분은 신한투자증권의 이진명 님입니다. 질문해 주십시오.

HD Jong: The following question is by Jin Myung Lee from Shinhan Securities. Please go ahead.

Speaker #3: 네. 안녕하세요. 신원 이진명 연구원입니다. 먼저 질문 주셔서 감사드리고요. . 제가 세 가지 질문 드리도록 하겠습니다. 첫 번째는 저희 2분기 사업부별 재고 손익 현황과 그다음에 최고 가격 상한제나 중기 부담 같은 일회성 영향이 어떻게 되는지 말씀 부탁드리고요.

Lee Jin-myung: 안녕하세요. 신한 이진명 연구원입니다. 먼저 질문 주셔서 감사드리고요. 저는 세 가지 질문드리도록 하겠습니다. 첫 번째는 저희 1분기 사후적으로 재고 손익 현황과 그다음에 최고가격제와 전기보다 같은 일회성 영향이 어떻게 되는지 말씀 부탁드리고요. 두 번째 질문은 최근에 OSP가 마이너스까지 하락을 했는데 OSP 동향에 따른 하반기 실적 영향과 그다음에 최근에 중동 지수가 다시 부각이 되면서 OSP 상승 영향성을 어떻게 보는지 말씀 부탁드리겠습니다. 그다음 마지막 질문은 유황에 관련돼서 지금 하반기와 내년도 수주 상황과 신규 증설 물량이 있는지 말씀해 주시면 감사하겠습니다.

Speaker #3: 두 번째 질문은 최근에 OST가 마이너스까지 하락을 했는데 OST 급락에 따른 하방의 추적 영향과 그다음에 최근에 중장기 지표가 다시 부각이 되면서 OST 상승 가능성은 어떻게 보시는지 말씀 좀 부탁드리겠습니다.

Speaker #3: 그다음 마지막 질문은 유사기에 관련돼서 지금 하반기랑 내년도 수급 상황과 신규 증설 물량이 있는지 말씀 좀 해주시면 감사하겠습니다.

Speaker #1: So thank you for the opportunity to pose some questions. I have three questions. First is the inventory gain from Austin Q2. And was this affected by some one-off factors such as maximum price cap?

[Company Representative] (S-Oil): Thank you for the opportunity to pose some questions. I have three questions. First is the inventory gains and loss in Q2, and was this affected by some one-off factors such as maximum price system? Second question is, what do you think the plummeting OSP, how do you think this will affect the company's performance in H2? Do you think the OSP could recover and go up again because of the renewed geopolitical risks in the Middle East? My third question is: what is your outlook on the refiner business in H2 and for 2027? Also, any outlook on expansion?

Speaker #1: Second question is what do you think the OST sudden plummeting OST how do you think this will affect the company's performance in the second half of the year?

Speaker #1: And do you think the OST could recover and go up again because of the renewed geopolitical risks in the Middle East? And my third question is what is your outlook on the weekday solar business in the second half of the year?

Speaker #1: And for 2027? And also any outlook on the expansion?

Speaker #5: 네. 저 첫 번째 2분기 일회성 손익 영향 먼저 말씀드리겠습니다. 2분기 영업이익에 반영된 재고 관련 이익은 앞서 말씀드린 바와 같이 1,137억 원, 환율 관련 영향은 1,168억 원입니다.

[Company Representative] (S-Oil): 네. 먼저 첫 번째, 2분기 일회성 손이익 영향 먼저 말씀드리겠습니다. 2분기 영업이익에 반영된 재고 관련 이익은 앞서 말씀드린 바와 같이 1,137억원, 환율 관련 영향은 1,168억원입니다.

Speaker #1: So to answer your first question on the inventory gain from Austin Q2 and the one-off impact, as I presented earlier in Q2, the inventory-related gains is 113.7 billion won.

[Company Representative] (S-Oil): To answer your first question on the inventory gains and losses in Q2 and the one-off impact. As I presented earlier, in Q2, the inventory related gains is KRW 113.7 billion and the FX-related is KRW 116.8 billion.

Speaker #1: And the SX-related is 116.8 billion won.

Speaker #5: 2분기 재고 관련 이익은 대부분 분할 부문에서 발생을 하였습니다. 정유 부문은 3월 말 대비 6월 말 국제유가가 하락했음에도 불구하고 재고 원유분 투입 효과와 6월 투입분 원유의 OST가 높은 관계로 재고 효과는 소폭 플러스를 기록하였고 석유화학 부문에서는 2분기 납사 가격 하락 등에 따라 소폭 마이너스의 재고 효과를 기록하였습니다.

[Company Representative] (S-Oil): 2분기 재고 관련 이익은 대부분 증류 부문에서 발생을 하였습니다. 정유 부문은 3월 말 대비 6월 말 국제유가가 하락했음에도 불구하고 재고 원유분 투입 효과와 6월 투입 원유의 OSP가 높은 관계로 재고 효과는 소폭 플러스를 기록하였고, 석유화학 부문에서는 2분기 나프사 가격 하락 등에 따라 소폭 마이너스의 재고 효과를 기록하였습니다.

Speaker #1: So as I said id earlier, in Q2, most of the inventory gains came from the weekday soil business. And the refining business, even though the International Oil Price at the end of June was lower than that at the end of March, it reported a slight positive because of because we treated the crude oil from the inventory and the OST of crude oil treated in June was high.

[Company Representative] (S-Oil): As I said earlier, in Q2, most of the inventory gains came from the lube oil business. In the refining business, even though the international oil price at the end of June was lower than that at the end of March, it reported a slight positive because we treated the crude oil from the inventory and the OSP of crude oil treated in June was high. In the petrochemical business, it was slightly negative because of reduced naphtha price in Q2.

Speaker #1: And in the petrochemical business, it was slightly negative because of reduced nafta price in Q2.

Speaker #5: 네. 두 번째 최고 OST의 상한제 운영 관련해서는 아시는 바와 같이 지난 3월 13일부터 현재까지 석유 최고 가격제가 시행되고 있습니다.

[Company Representative] (S-Oil): 네, 두 번째 최고가격제 상한제 영향 관련해서는 아시는 바와 같이 지난 3월 13일부터 현재까지 석유 최고가격제가 시행되고 있습니다.

Speaker #1: And as for the impact from the maximum price cap, as you know well, the government made the announcement on this policy on March 13th.

[Company Representative] (S-Oil): As for the impact from the maximum price system, as you know well, the government made the announcement on this policy on 13 March, it is still ongoing.

Speaker #1: And it is still ongoing.

Speaker #5: 정부는 최고 OST 시행에 따른 정유사 손실 보전에 대한 재정 지원 고시를 발표하였고 최고액 정산위원회 심사를 거쳐 보상을 진행할 계획입니다. 이와 관련해서 정유사 손실 보전을 위한 추가 예산을 편성한 것으로 알고 있습니다.

[Company Representative] (S-Oil): 정부는 석유 최고가격제 시행에 따른 정유사 손실 보전에 대한 지정 지원 고시를 발표하였고, 최고액 정산위원회 심사를 거쳐 보상을 진행할 계획입니다. 이와 관련해서 정유사 손실 보전을 위한 추가 예산을 편성한 것으로 알고 있습니다.

Speaker #1: So the government also made the notice about compensating the refiner's loss later. And it will deliberate this on a quarterly basis in the government-led committee.

[Company Representative] (S-Oil): The government also made the notice about compensating the refiners' loss later, it will deliberate this on a quarterly basis in the government-led committee and also compensate. We understand that the government made an extra budgeting to compensate for the refiners' loss.

Speaker #1: And also compensate. And we understand that the government made an extra budgeting to compensate for the refiner's loss.

Speaker #5: 예. 따라서 회사는 최고 가격제 시행에 따른 손실분에 대해서 시차를 두고 보전을 받을 것으로 기대하고 있습니다.

[Company Representative] (S-Oil): 이에 따라 회사는 최고가격제 시행에 따른 손실분에 대해서 시차를 두고 보전을 받을 것으로 기대하고 있습니다.

Speaker #1: And subsequently, the company expects compensation for the loss incurred as a result of the maximum price cap with some time lapse.

[Company Representative] (S-Oil): Subsequently, the company expects compensation for the loss incurred as a result of the maximum price system with some time lag.

Speaker #5: 다만 손실 금액은 산출 기준이나 방식에 따라 달라질 수 있고 현재 정산위원회가 구성되어 기준 금액 산정 및 자료 제출 가이드라인을 마련하고 있는 상황이어서 현재 시점에서 회사의 손실액이나 보상 가능 규모는 유동적이라 구체적인 금액을 말씀드릴 말씀드리기는 어렵습니다.

[Company Representative] (S-Oil): 다만 손실 금액은 산출 기준이나 방식에 따라 달라질 수 있고, 현재 정산위원회가 구성되어 기준 금액 산정 및 자료 제출 가이드라인을 마련하고 있는 상황이어서 현재 시점에서 회사의 손실액이나 보상 가능 규모는 유동적이라 구체적인 금액을 말씀드리기는 어렵습니다.

Speaker #1: However, the amount of loss can vary depending on the formula and the assumptions. At the moment. Government organized the related committee. And it's developing the guidelines on what kind of documents need to be submitted to the government and how to estimate the standard price.

[Company Representative] (S-Oil): However, the amount of loss can vary depending on the formula and the assumption. At the moment, the government organized the related committee and is developing the guidelines on what kind of documents need to be submitted to the government and how to estimate a standard price. Therefore, the overall situation, whether the amount of loss and the compensation to the refiners is all fluid, therefore we cannot arrive at any conclusive fact at the moment.

Speaker #1: And therefore, the overall situation, whether the amount of loss and the compensation to the refiners is all fluid and therefore we cannot arrive at any conclusive fact at the moment.

Speaker #5: 네. 다음에 다음으로 저희 OST 관련 영향 말씀드리겠습니다. 당사는 원유의 대부분을 사우디 원유로 조달을 하고 있기 때문에 OST 하락은 당사 마진 증가와 직접적으로 연관이 있습니다.

[Company Representative] (S-Oil): 네, 다음으로 OSP 관련 영향 말씀드리겠습니다. 당사는 원유의 대부분을 사우디 원유로 조달을 하고 있기 때문에 OSP 하락은 당사 마진 증가와 직접적으로 연관이 있습니다.

Speaker #1: And your second question about the OST. Since the company mostly sources Saudi crude oil, lower OST has a direct impact on the company's margin in a positive note.

[Company Representative] (S-Oil): Your second question about the OSP. Since the company mostly sources on Saudi crude oil, lower OSP has a direct impact on the company's margin in a positive note.

Speaker #5: 아시는 바와 같이 최근 OST 변동은 매우 큰 변동성을 보이고 있습니다. 5월에는 전월 대비 전유종 배럴당 17불 인상하며 역대 최고치를 기록하였고 6월부터는 중동의 지정학적 리스크 축소되면서 하락 추세로 전환되었습니다.

[Company Representative] (S-Oil): 아시는 바와 같이 최근 OSP 변동은 매우 큰 변동성을 보이고 있습니다. 5월에는 전월 대비 전유종 배럴당 $17 인상하며 역대 최고치를 기록하였고, 6월부터는 중동의 지정학적 리스크 축소되면서 하락세로 전환되었습니다. 특히 8월 선적분 OSP의 경우에는 전월 대비 배럴당 $11 인하를 단행하며 역사상 최대 인하 폭을 기록하였습니다.

Speaker #5: 특히 8월 성적분 OST의 경우에는 전월 대비 배럴당 11불 인하를 단행하며 역사상 최대 인하폭을 기록하였습니다.

Speaker #1: So as you know well, we've seen we've been seeing very high volatility in the OST movement lately. The Saudi crude OST for May lasting went up by $17 from the previous month, which is record high ever.

[Company Representative] (S-Oil): As you know well, we've been seeing very high volatility in the OSP movement lately. The Saudi crude OSP for May listing went up by $17 from the previous month, which is the record high ever. It turned down from June as the geopolitical risks in the Middle East subsided and the OPEC+ moved towards raising the output. In particular, the OSP for August listing went down by $11 from the previous month, which is also the lowest cut ever in history.

Speaker #1: But it went down from June as the geopolitical risks in the Middle East subsided. And the OPEC Plus moved towards raising the output. In particular, the OST for August lasting went down by $11 from the previous month, which is also the lowest cut ever in history.

Speaker #5: 앞으로도 OST 변동성은 클 것으로 예상하고 있습니다. 호르무즈 해협에 이어서 홍해 공세 가능성이 대두됨에 따라 중동 지역 원유 소싱 관련 리스크가 현재 존재하고 있습니다. 만약 홍해 항로가 봉쇄된다면 사우디 원유는 수에즈 운하를 경유하여 아프리카 대륙을 돌아서 와야 되기 때문에 운송 기간 증가로 인한 운임과 운전 자본 추가 부담이 아시아 정유사에 발생하게 됩니다.

[Company Representative] (S-Oil): 앞으로도 OSP 변동성은 클 것으로 예상하고 있습니다. 호르무즈 해협에 이어서 홍해의 봉쇄 가능성이 제기됨에 따라 중동 지역 원유 소싱 관련 리스크가 현재 존재하고 있습니다. 만약 홍해 항로가 봉쇄된다면 사우디 원유는 수에즈 운하를 경유하여 아프리카 대륙을 돌아서 와야 되기 때문에 운송 기간 증가로 인한 운임과 운전 자본 추가 부담이 아시아 정유사에 발생하게 됩니다.

Speaker #1: And we are expecting the OST to remain quite volatile going forward. If because of the possibility of the Red Sea being blocked on top of this rate of Hormuz, there is the related to crude sourcing from the Middle East.

[Company Representative] (S-Oil): We are expecting the OSP to remain quite volatile going forward. Because of the possibility of the Red Sea being blocked on top of the Strait of Hormuz, there is the risk related to crude sourcing from the Middle East. If the Red Sea is indeed blocked, then the Saudi crude will have to make a detour through the Suez Canal and all the way to the African continent, which will extend the transportation period and add additional burden and pressure to Asian refiners in terms of freight and working capital.

Speaker #1: And if this rate of if the Red Sea is indeed blocked, then the Saudi crude will have to make a detour through the Suez Canal and all the way to the African continent, which will extend the transportation period and add additional burden and pressure to Asian refiners in terms of freight and working capital.

Speaker #5: 이러한 점은 사우디 원유의 가격 경쟁력 가격 경쟁력 측면에서 OST 하락 요인으로 작용할 수 있습니다. 반대로 홍해 봉쇄에 따른 중동 원유 수급 제약은 OST 상승 요인으로도 작용할 수 있습니다.

[Company Representative] (S-Oil): 이러한 점은 사우디 원유의 가격 경쟁력 측면에서 OSP 하락 요인으로 작용할 수 있습니다. 반대로 홍해 봉쇄에 따른 중동 원유 수급 제약은 OSP 상승 요인으로도 작용할 수 있습니다.

Speaker #1: So this could move the OST of both ways. The OST could go down if Saudi crude wants to maintain its price competitiveness. However, it could go up if there is restrictions in crude oil supply from the Middle East because of the blockade of the Red Sea.

[Company Representative] (S-Oil): This could move the OSP both ways. The OSP could go down if Saudi crude wants to maintain its price competitiveness. However, it could go up if there is restrictions in crude oil supply from the Middle East because of the blockade of the Red Sea.

Speaker #5: 만약 반대로 지정학적 이슈 상황이 완전히 해소된다면 산유국들의 마켓 셰어 경쟁 마켓 셰어 확보 차원에서 8월 성적분 OST처럼 다시 상당히 낮은 OST가 유지될 수도 있습니다.

[Company Representative] (S-Oil): 만약 반대로 지정학적 이슈 상황이 완전히 해소된다면 산유국들이 마켓셰어 확보 차원에서 8월 선적분 OSP처럼 다시 상당히 낮은 OSP가 유지될 수도 있습니다.

Speaker #1: So if the lockup of this rate of Hormuz and the Red Sea are entirely and completely cleared, then the oil producers in the Middle East could compete to secure their market share in which case the OST could remain quite low, just like the August lasting OST.

[Company Representative] (S-Oil): If the lockup of the Strait of Hormuz and the Red Sea are entirely and completely cleared, then the oil producers in the Middle East could compete to secure their market share, in which case the OSP could remain quite low, just like the August listing OSP.

Speaker #5: 따라서 현재 시점에서 OST는 OST 방향을 말씀드리기는 힘든 상황이며 지정학적 이슈 전개 방향에 따라서 변동성이 클 것으로 보입니다.

[Company Representative] (S-Oil): 따라서 현재 시점에서 OSP 방향을 말씀드리기는 힘든 상황이며, 지정학적 이슈 전개 방향에 따라서 변동성이 클 것으로 보입니다.

Speaker #1: So at this moment, it's very hard to predict how the OST will evolve. But we believe it will all be subject to the evolutions in the geopolitical situation in the Middle East.

[Company Representative] (S-Oil): At this moment, it's very hard to predict how the OSP will evolve. We believe it will all be subject to the evolutions in the geopolitical situation in the Middle East.

Speaker #5: 마지막으로 윤활유 수급 관련해서 설명드리겠습니다.

[Company Representative] (S-Oil): 마지막으로 윤활유 수급 관련해서 설명드리겠습니다.

Speaker #1: And my third and I will answer your third question on the loose base oil supply.

[Company Representative] (S-Oil): I will answer your third question on the lube base oil supply.

Speaker #5: 앞서 말씀드린 바와 같이 현재 중동발 생산 및 물류 차질로 그룹 3 중심으로 윤활유 수급은 매우 타이트한 상황이며 최소 5년 말, 길게는 내년까지도 시장에 영향을 줄 것으로 저희는 보고 있습니다.

[Company Representative] (S-Oil): 앞서 말씀드린 바와 같이 현재 중동발 생산 및 물류 차질로 그룹 III 중심으로 윤활유 수급은 매우 타이트한 상황이며, 최소 올 연말, 길게는 내년까지도 시장에 영향을 줄 것으로 저희는 보고 있습니다.

Speaker #1: As I said in my presentation earlier, we are expecting this high loose base oil supply situation to continue at least until the end of the year or even next year led mostly by Group 3 because of the production and logistical disruptions in the Middle East.

[Company Representative] (S-Oil): As I said in my presentation earlier, we are expecting the high lube base oil supply situation to continue at least until the end of the year or even next year, led mostly by Group III because of the production and logistical disruptions in the Middle East.

Speaker #5: 그룹별로 살펴보면 아까 말씀드린 바와 같이 그룹 3가 시황을 지배할 것으로 보입니다.

[Company Representative] (S-Oil): 그룹별로 살펴보면 아까 말씀드린 바와 같이 Group III가 시황을 주도할 것으로 보입니다.

Speaker #1: And we believe out of the three groups, Group 3 will lead the overall loose base oil market conditions.

[Company Representative] (S-Oil): We believe out of the 3 groups, Group III will lead the overall lube base oil market conditions.

Speaker #5: 윤활유 증설 관련해서는 2027년까지는 증설 관련 영향이 제한적일 것으로 보고 있습니다.

[Company Representative] (S-Oil): 윤활유 증설 관련해서는 2027년까지는 증설 관련 영향이 제한적일 것으로 보고 있습니다.

Speaker #1: And as for the new capacity expansions, we believe the impact of capacity expansions will be limited until 2027.

[Company Representative] (S-Oil): As for the new capacity expansions, we believe the impact of capacity expansions will be limited until 2027.

Speaker #5: 먼저 윤활유 제품은 품목별 제품이 아니기 때문에 신규 설비가 가동되더라도 시장에 영향을 주는 데는 추가 시간이 소요되는 특성이 있습니다.

[Company Representative] (S-Oil): 먼저 윤활유 제품은 commodity 제품이 아니기 때문에 신규 설비가 가동되더라도 시장에 영향을 주는 데는 추가 시간이 소요되는 특성이 있습니다.

Speaker #1: Since loose base oil is not a commodity, it usually takes extra time before the new facilities impact the market.

[Company Representative] (S-Oil): Since lube base oil is not a commodity, it usually takes extra time before the new facilities impact the market.

Speaker #5: 작년 연말에 싱가포르에 연산 100만 톤 규모의 그룹 2 신규 설비 증설이 있었지만 최근 일부 가동 차질을 겪고 있는 걸로 탐문되어 시장에 영향을 주는 데는 다소 시차가 소요될 것으로 보이고 금년에는 인도, 사우디, 폴란드 등의 그룹 2 그룹 2, 그룹 3 설비 증설이 예정되어 있지만 중동 전쟁 발발로 기유 생산이 조정되거나 기존 계획 대비 가동이 지연될 가능성이 있습니다.

[Company Representative] (S-Oil): 작년 연말에 싱가포르에 연산 100만 톤 규모의 그룹 II 신규 설비 증설이 있었지만, 최근 일부 가동 차질을 겪고 있는 걸로 탐문되어 시장에 영향을 주는 데는 다소 시차가 소요될 것으로 보이고, 금년에는 인도, 사우디, 폴란드 등에 그룹 II, 그룹 III 설비 증설이 예정되어 있지만 중동 전쟁 발발로 기유 생산이 조정되거나 기존 계획 대비 가동이 지연될 가능성이 있습니다.

Speaker #1: So at the end of 2025, there was a Group 2 expansion. 1 million ton a year in Singapore. However, we understand that there are some partial operational issues there.

[Company Representative] (S-Oil): At the end of 2025, there was a Group II expansion, 1 million tons a year in Singapore. However, we understand that there are some partial operational issues there, and therefore it will take some time before the new facilities expansion impact the market. This year, there is a scheduled facility expansion for Group II and III in India, Saudi Arabia, and Poland. However, the production could be adjusted or the schedule could be slightly delayed because of the war in the Middle East.

Speaker #1: And it will take, therefore, it will take some time before the new facilities expansion impact the market. And this year, there is a scheduled facilities expansion for Group 2 and 3 in India, Saudi Arabia, and Poland.

Speaker #1: However, the production could be adjusted or the schedule could be slightly delayed because of the war in the Middle East.

Speaker #5: 금년 금년 증설되는 설비가 시황에 본격적인 영향을 주는 것은 되면 또는 내후년일 것으로 전망되어 윤활유 시황은 당분간 강세를 이어갈 것으로 예상하고 있습니다.

[Company Representative] (S-Oil): 금년 증설되는 설비가 시황에 본격적인 영향을 주는 것은 내년 또는 내후년일 것으로 전망되어 윤활유 시황은 당분간 강세를 이어갈 것으로 예상하고 있습니다.

[Company Representative] (S-Oil): [Foreign language]

[Company Representative] (S-Oil): [Foreign language] Group III [Foreign language]

[Company Representative] (S-Oil): We believe out of the 3 groups, Group III will lead the overall lube base oil market conditions.

[Company Representative] (S-Oil): [Foreign language] 2027 [Foreign language]

[Company Representative] (S-Oil): As for the new capacity expansions, we believe the impact of capacity expansions will be limited until 2027.

[Company Representative] (S-Oil): [Foreign language] commodity [Foreign language]

[Company Representative] (S-Oil): Since lube base oil is not a commodity, it usually takes extra time before the new facilities impact the market.

[Company Representative] (S-Oil): [Foreign language]

Speaker #1: And therefore, it will be maybe 2027 or the year after that when the new facilities start to seek into the market and impact the market.

[Company Representative] (S-Oil): Therefore it will be maybe 2027 or the year after that when the new facilities start to seep into the market and impact the market, and therefore we believe the lube base oil market conditions to stay very strong for the time being.

Speaker #1: And therefore, we believe the loose base oil market conditions to stay very strong for the time being.

Speaker #5: 이상으로 답변 마치겠습니다.

Speaker #1: Let's conclude my answering your third question.

[Company Representative] (S-Oil): [Foreign language]

[Company Representative] (S-Oil): 이상으로 답변 마치겠습니다.

Speaker #5: 예. 오늘도 약속한 시간이 지난 것 같습니다. SOU에 대한 관심으로 오늘 실적 발표에 참여해 주신 투자자와 애널리스트 여러분들께 다시 한번 감사의 말씀을 드립니다. 회사는 투명하고 공정한 소통을 위해 최선의 노력을 기울이겠습니다.

[Company Representative] (S-Oil): This concludes my answering the third question.

[Company Representative] (S-Oil): [Foreign language]

[Company Representative] (S-Oil): 네. 오늘도 약속한 시간이 지난 것 같습니다. S-Oil에 대한 관심으로 오늘 실적 발표에 참여해 주신 투자자와 애널리스트 여러분들께 다시 한번 감사의 말씀을 드립니다. 회사는 투명하고 공정한 소통을 위해 최선의 노력을 기울이겠습니다. 추가로 문의하실 점은 당사 IR팀으로 연락주시기 바랍니다. 이것으로 오늘 실적 발표를 마치도록 하겠습니다. 감사합니다.

Speaker #5: 추가로 문의하실 점은 당사 IR팀으로 연락 주시기 바랍니다. 이것으로 오늘 실적 발표를 마치도록 하겠습니다. 감사합니다.

Speaker #1: Thank you once again for sharing your interest in us oil. And I would like to thank all the analysts and investors for participating in the earnings release.

[Company Representative] (S-Oil): Thank you once again for showing your interest in S-Oil, and I would like to thank all the analysts and investors for participating in the earnings release. Going forward, S-Oil will continue to engage in transparent and thorough communications with the market. If you have any further questions, please feel free to contact the company's IR team. Thank you very much.

Speaker #1: Going forward, as oil will continue to engage in transparent intercommunications with the market, and if you have any further questions, please feel free to contact the company via our team.

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Q2 2026 S-Oil Corp Earnings Call

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