S-Oil launches $7 bln petrochemical project in S. Korea in downstream expansion

SEOUL– S-Oil Corp., a major South Korea-based refiner, unveiled Thursday a US$7 billion project to build a large-scale petrochemical plant in the country’s southeast, in what will be a milestone in its downstream expansion from oil refining-oriented to petrochemicals.

The Shaheen Project aims to build a steam cracking facility to produce up to 3.2 million tons a year of primary building blocks for petrochemical products, including ethylene and polyethylene, in S-Oil’s main complex in the industrial city of Ulsan, about 300 kilometers southeast of Seoul, the Seoul-based subsidiary of Saudi Arabian Oil Co. (Aramco) said.

The decision was finalized upon the approval of the board of directors at a meeting on Wednesday, S-Oil said. Shaheen means a hawk in Arabic.

The project will start next year for completion set for 2026.

“We have taken the first step in the long journey ahead for the development,” S-Oil CEO Hussain Al-Qahtani said in a release.

“I’m confident that the Shaheen Project will contribute to expanding our business portfolio into petrochemicals and achieving an industry-leading energy efficiency,” Al-Qahtani said.

The announcement coincided with the visit by Saudi Crown Prince Mohammed bin Salman, who arrived here late Wednesday on a trip expected to center on enhancing business ties with Korean firms.
The steam cracker will produce basic petrochemical feedstock, such as ethylene, propylene, butadiene and benzene, from naphtha and off-gas. They are types of primary petrochemicals used as feedstock for a wide range of products from plastics, synthetic rubber and fibers to drugs.

It will also produce polyethylene the most common plastic widely used in packaging.

S-Oil had begun to push for the Shaheen project as early as around 2020 but experienced hiccups due to the COVID-19 outbreak and subsequent border lockdowns.

The Shaheen project is S-Oil’s second-phase investment in petrochemical expansion after it spent $4 billion for facility expansion to produce high value-added petrochemical products, such as propylene, propylene oxide and polypropylene, by reprocessing low-value residue oil, like heavy fuel, from crude oil refining.

The project will help S-Oil increase the petrochemical portion of the business to 25 percent by 2030 from the current level of 12 percent, the refiner said.

S-Oil, the third-largest refiner in South Korea, has been ramping up to shift its focus from the traditional oil refining to petrochemical production and other green energy areas like hydrogen as a strategy to diversify its future growth engines.

Saudi Aramco will provide its advanced technology designed to convert crude oil to petrochemical products under the memorandum of understanding inked with S-Oil early this year for collaboration on hydrogen and other alternative low-carbon energy.

Source: Yonhap News Agency

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