* Australia expected to become top net importer of diesel inAsia
* South Korean refiners most aggressive targeting Australia
* Refiners such as GS Caltex and S-Oil have spare capacity
* Also able to make the clean-burning fuel Australia wants
By Jane Chung and Meeyoung Cho
SEOUL, April 29 (Reuters) - South Korean oil refiners lookthe best placed to meet extra demand in Asia created by a seriesof plant closures in Australia, given they are building upcapacity and produce the high-quality gasoline and dieselAustralia uses.
Other major suppliers in the region of these cleaner-burningfuels include Singapore and Japan, but industry sources saySouth Korean refiners have been the most aggressive targetingAustralia after doubling exports in the past two years.
The extra Australian demand offers a new market at time whenAsia's fuel demand has weakened due to a slowdown in theeconomies of top fuel consumers China and India.
Singapore is the top fuel supplier to Australia, meetingabout half of its imports, while South Korea accounts for nearlya fifth and Japan around 12 percent.
"But as the Australian import requirement rises, that leavesmore space for Korean refiners to come in," said Alex Yap,energy consultant at FGE Singapore, adding that Korean refinerscould easily meet the specifications and had the spare capacity.
Australia has seen a series of refinery closures and in somecases facilities are being converted into fuel terminals.
BP was the latest example after it said on April 2 itwould shut its 102,000 barrel-per-day (bpd) plant in Brisbaneby 2015, blaming competition from new mega-refineries in Asia.
Royal Dutch Shell, Chevron Corp 's CaltexAustralia and Exxon Mobil Corp have also shutrefineries in Australia over the last few years.
The closures mean by 2015 Australia will have only fourrefineries with a combined capacity of 448,500 bpd and isexpected to become the largest net importer of diesel andsecond-largest net importer of gasoline in Asia, importing morethan half of its fuel needs.
NEW MARKET
South Korea's top refiners SK Energy, GS Caltex, S-Oil Corp, and Hyundai Oilbank have been investing to boostoutput of fuels such as gasoline and diesel.
They are also prepared to offer fuel at a small profitmargin to expand market share in Australia, according to sourcesat refiners with direct knowledge of the matter.
On the other hand, Japan has been closing ageing refineriesand Singapore is also not in a strong position to hike exportsas international oil firms have contracted much of its fuel toship between their own refineries.
"Korean refiners have been preparing for a long time,expecting higher demand from Australia where refineries will beshifting to import terminals," said a source at S-Oil, whodeclined to be named as he was not authorized to speak to media.
An S-Oil spokesman declined to comment on its plans, but thefirm last year renewed a term deal worth $1.7 billion to 2015with Australian petrol and convenience store retailer UnitedPetroleum to supply up to 531,000 tonnes per year (12,366 bpd)of gasoline and up to 334,000 tonnes per year (6,863 bpd) ofdiesel in addition to spot sales.
Stronger Australian demand could support weaker Asiancracks, or margins from refining a barrel of crude into fuel.
For example, margins on the low-sulphur diesel used byAustralia were $18.98 a barrel, down from $21.09 a year ago,according to Reuters calculations based on the prices of 10parts per million sulphur diesel and Dubai crude.
JUMP IN SOUTH KOREAN EXPORTS
Asian refiners have a clear advantage on shipping costs toAustralia compared to regions such as Europe.
Singapore, South Korea and Japan jointly supplied 84 percentof Australia's 517,969 bpd fuel imports in the last financialyear, up from 78 percent a year earlier, Australian data showed.
South Korea saw by far the biggest rise as its exports toAustralia rose 60 percent to 94,816 bpd, moving ahead of Japan's63,173 bpd although still well below Singapore's 274,770 bpd.
Japan's ability to lift exports could be limited as it shutsrefineries and since it mainly exports diesel. Its refiningcapacity has fallen to 3.95 million bpd by the end of March,from 4.89 million bpd in April 2008. South Korea's capacity is2.95 million bpd, while Singapore's refining capacity is 1.4million bpd.
($1 = 1037.6000 Korean Won) (Additional reporting by Florence Tan and Lipeng Seng inSINGAPORE, and Osamu Tsukimori in Tokyo; Editing by ManashGoswami and Ed Davies)
BP (BP.)
