Weakness in the refining sector due to low refining margins, partly offset by stronger petrochemicals and polymers operations dragged down profits Oil Refineries Ltd. (TASE:ORL) 75% to $24.5 million for the third quarter of 2010 from $100.1 million for the corresponding quarter of 2009.
Revenue rose 17.8% to $1.71 billion for the third quarter from $1.45 billion for the corresponding quarter, although revenue was down 8.3% compared with the preceding quarter. Revenue in the third quarter of 2009 was affected by the shutting down of some of Oil Refineries' facilities for renovations.
Refining volume rose to 2.31 million metric tons for the third quarter from 1.77 million tons for the corresponding quarter, but was down slightly from the preceding quarter. Utilization of production plants rose to 94.5% during the third quarter from 76.5% during the corresponding quarter.
Oil Refineries' refining margin (the difference between the price per barrel of crude oil purchased by the company and the price of refined oil products sold) was $1.70 per barrel. The margin was similar to the benchmark margin published by Reuters for a Mediterranean refinery having the capability of cracking Ural-type crude oil in 2010.
It cannot be ruled out that Oil Refineries was unable to better the refining margin because it refined a surplus in preparation for the shutdown of some facilities for upgrades carried out in October.
Oil Refineries CEO Yashar Ben Mordechai said that refining margins widened in October to $4 per barrel, partly because of strikes at French refineries, and that the margin again narrowed to $2.40 per barrel by mid-November.
Israel Corporation (TASE: ILCO) owns 37.08% of Oil Refineries and Israel Petrochemical Enterprises Ltd. (TASE:PTCH) owns 30.72%. Oil Refineries share price rose 1.6% to NIS 2.30, giving a market cap of NIS 5.52 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on November 22, 2010
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