S-Oil to invest W5 tril. to expand petrochemical output

By Nam Hyun-woo

S-Oil will invest more than 5 trillion won ($4.47 billion) over the next five years to build advanced facilities for producing ethylene and other basic petrochemicals, the company said Wednesday.

The refiner said it has been conducting a feasibility study about building a mixed feed cracker capable of producing 1.5 million tons of chemicals annually and olefin downstream facilities.

S-Oil said those facilities will be part of its phase two investment project to expand its petrochemical portfolio and it will invest 5 trillion won into the project until 2023.

The steam cracker will produce ethylene and other basic petrochemicals from naphtha and off-gas burned as fuel in the refinery, giving advantages to the company over feedstock sourcing and cost competitiveness. Olefin downstream facilities will produce an increased volume of high value petrochemical products including polyethylene and polypropylene.

For the project, S-Oil said it has already purchased a 400,000 square meter parcel of land in Ulsan from Hyundai Heavy Industries. The land is near S-Oil's refinery in Onsan-eup, Ulsan.

“Should the project be approved, S-Oil can create a mega-scale single location plant and secure higher economic and operational efficiency,” an S-Oil official said.

S-Oil said the project will also benefit the local economy significantly, by reinvigorating construction and increasing exports. The company expects the project will create 400 regular jobs and 2.7 million man-days during the construction.

The new project is in line with the refiner's roadmap suggested by CEO Othman Al-Ghamdi to become an integrated energy and chemical company by 2025.

On the roadmap, the company poured 4.8 trillion won to build a residue upgrading complex (RUC) and an olefin downstream complex (ODC), which are advanced facilities for producing high value added products from residues.

“Once approved, the new project will serve as a new growth engine driving S-Oil's sustainable growth by diversifying its business portfolio, sharpening competitiveness and building a more stable income structure,” the official said.

“S-Oil is confident that it will put the company in a better position to navigate through the rapid changes in the business environment brought on by shale oil and electric vehicles.”