Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Shaheen project underway without capacity cut
Construction is underway at the Shaheen project site near S-Oil's plant in Ulsan, Tuesday. Courtesy of S-Oil
By Park Jae-hyuk
S-Oil highlights new petrochemical facility's efficiency
ULSAN — Construction of Korea’s largest petrochemical facility was in full swing near S-Oil’s plant in the southeastern port city of Ulsan Tuesday.
Despite a government recommendation that the struggling petrochemical industry reduce output at naphtha cracking centers (NCCs), the Saudi Aramco-owned refiner was proceeding with the over $7 billion Shaheen project as planned.
As of Tuesday, the project was more than 85 percent complete.
A supervisor from Hyundai E&C told reporters that last-minute efforts were underway to finish work that began in March 2023. Hyundai E&C leads a consortium of construction firms involved in the project, including Hyundai Engineering, Lotte E&C and DL E&C.
“Just a year ago, the project was about 40 percent finished,” the supervisor said at an observatory overlooking the construction site. “Around 11,000 workers from Ulsan and nearby cities come to the site every day.”
Construction is underway at the Shaheen project site near S-Oil's plant in Ulsan, Tuesday. Courtesy of S-Oil
There had been speculation that S-Oil might cut the new facility’s capacity to join domestic petrochemical firms’ joint efforts to lower combined output at NCCs nationwide by up to 25 percent, or 3.7 million tons.
Those companies agreed to the proposed capacity cut in August, when the government urged them to submit self-rescue plans in exchange for relaxed regulations, financial support and tax incentives to revitalize the sector. The initiative was launched in response to a prolonged downturn in the industry caused by oversupply from China and the Middle East.
At the time, the government took into account the potential output from S-Oil’s new facility, saying domestic NCC production would reach 14.7 million tons once the company finishes the Shaheen project.
S-Oil declined to comment on the government policies. However, the company has stressed that its new facility will be Korea’s most efficient petrochemical plant.
Using a thermal crude-to-chemicals (TC2C) method developed with Aramco technology, S-Oil aims for feedstock yields three to four times higher than conventional processes. According to the company, the TC2C method enhances petrochemical feedstock output and reduces carbon intensity.
“The new facility simplifies processes, maximizes energy efficiency and reduces carbon emissions, allowing us to further advance vertical integration of our refining and petrochemical operations,” an S-Oil official said.
After mechanical completion of the new facility in June next year, S-Oil will start test operations expected to last at least six months. If tests succeed, the plant will annually produce 1.8 million tons of ethylene, 770,000 tons of propylene, 200,000 tons of butadiene and 280,000 tons of benzene.
S-Oil plans to supply these chemicals to local downstream businesses through a dedicated pipeline.
The company said long-term supply agreements with petrochemical firms at the Onsan National Industrial Complex in Ulsan are already underway, boosting the competitiveness of the domestic industry’s value chain.
“Downstream businesses will be able to cut transportation costs in the value chain thanks to timely and stable feedstock supply, which will help create a competitive petrochemical cluster,” the official added.