Lotte Chemical completes gas plant in Uzbekistan
Lotte Chemical CEO Huh Soo-young answers questions at a press conference to mark the completion of its chemical plant in Uzbekistan, at the Lotte Hotel, downtown Seoul, Thursday. / Courtesy of Lotte Chemical
By Kim Yoo-chul
Lotte Chemical, the chemical affiliate of Lotte Group, has completed construction of a huge gas chemical complex in Uzbekistan in a project company officials say will have vital importance for its overseas growth.
“The completion of the gas chemical plant is a result of close cooperation between the governments of Korea and Uzbekistan and private companies. This plan is the biggest in size in the Eurasia region built by a Korean chemical firm. Lotte is proud to put the project online,” Lotte Chemical CEO Huh Soo-young said at a press conference at the Lotte Hotel, downtown Seoul, Thursday.
The plan, which is on a 300,000 square meter tract, is the result of an investment of some $3.89 billion or 4.3 trillion won. In June 2014, Korea agreed with the central Asian country to proceed with the project during summit talks.
The plant will be operational from January, Huh said.
The Surgil gas project is an mutual venture of Uzbekistan and a Korean consortium including Lotte Chemical, KOGAS and GS E&R Corp., according to a statement by Lotte. The project was initiated in 2006.
Lotte said the complex will produce petrochemical feedstock polymers and Uzbekistan’s state-run oil and gas company, Uzbekneftegaz, plans to buy up to 3 million tons a year of liquefied natural gas (LNG) products.
“Chemical products to be produced from the facilities will be exported to countries in Europe, Central Asia, Russia and North Africa. One interesting point is that Lotte entirely handled for the construction of factories for high-density polyethylene (HDPE) and polypropylene (PP) products at the complex,” Huh said.
During the conference, the CEO said the completion of the factory helps Lotte realize a vertically integrated business structure in its chemical business from design and construction to delivery.
“We’re grateful to the Korean government for the support it provided for the project,” the CEO said, stressing the Lotte affiliate plans to focus on strengthening its footprint in core businesses rather than seek to expand its presence in none-core businesses.
In a question over its plan to start the construction of a gas-based ethane cracker-producing plant in the United States after it recently agreed with Axiall Corp. to set up a 3 trillion won joint venture, Huh said the construction will begin from next year and be completed by 2018.
“Financial decisions about the U.S. project will be fixed by the end of this year,” he said. “Lotte will invest $2.1 billion for the upcoming U.S. project, with Axiall handling the rest.”
Lotte also partnered with Mitsubishi of Japan to jointly manage a plant to produce MEG facilities so as to produce 700,000 tons in the U.S. state of Louisiana, with Lotte holding a 70 percent share in the venture.
Huh said Lotte hopes to generate about $1.5 billion in annual revenue from 2019 after the U.S. facilities go online.
“The annual production of ethylene will rise to 3.7 million tons from the current 2.8 million tons. The Louisiana project will help us boost the company’s businesses in the United States,” according to the executive.
Lotte Chemical has been consistent in expanding its petrochemical facilities in Central Asia and other countries in recent years to diversify its portfolio at reduced costs.
For the first six months of this year, Lotte Chemical reported 817.8 billion won in operating profits, up 435.6 percent, year-on-year, the company said.