ContributionWar exposes naphtha risk, accelerates shift to circular feedstock

Geopolitical tensions in the Middle East are revealing more than a simple energy crisis — they are exposing a deeper vulnerability in the global petrochemical industry. The sparks from crude oil have now spread to naphtha.

Jeong Young-hoon

Korea and other Asian nations have long depended on the Middle East for a significant share of their naphtha imports, operating under the assumption that supply would remain stable. Yet instability around the Strait of Hormuz and the Gulf region is no longer just driving up oil prices; it has evolved into a structural risk threatening the very foundations of petrochemical feedstock supply.

The consequences are already rippling across the industry. Soaring product prices, supply disruptions, growing risks of contract defaults and declining utilization rates at naphtha cracking centers (NCCs) are converging to deepen uncertainty. This is no longer a temporary shock. It is a structural problem — one that will almost certainly repeat itself.

Against this backdrop, a fundamental question arises: Is continued dependence on fossil-based naphtha still a viable strategy?

The petrochemical industry has long faced two simultaneous pressures — unstable naphtha supply and pricing on one hand, and tightening carbon regulations on the other. In the past, these challenges were addressed separately.

Now, however, we have entered a phase in which both must be solved together. The answer, I argue, lies in waste resources such as waste plastics and waste vinyl — specifically, the industrial use of low-carbon circular feedstock recovered through chemical decomposition rather than physical recycling or incineration, grounded in a resource-circulation model. In short: Circular naphtha.

It is important to understand how this market differs from the recycled fuel sector. Unlike biodiesel or sustainable aviation fuel, the circular feedstock market for petrochemicals is not driven by mandatory blending obligations or minimum usage requirements. Instead, it is shaped by greenhouse gas accounting frameworks, mass balance systems and international certifications such as ISCC PLUS.

Within this structure, circular naphtha must evolve beyond an experimental alternative to become a feedstock fully integrated into existing refinery and NCC operations — a genuine industrial input, not a policy footnote.

Europe is already moving rapidly in this direction. While commercial-scale operations involving waste vinyl and plastics are still emerging, the integration of biodiesel and bionaphtha — derived from waste cooking oil and other bio-based feedstocks — into plastics manufacturing, aviation fuel and marine fuel has already reached commercialization. Crucially, this market expansion is being achieved not by building entirely new facilities, but by feeding circular feedstocks into existing infrastructure. That distinction is critical for scalability and cost.

Asia, including Korea, still faces a significant gap in this regard. Recycled fuels generate reliable statistical data through mandatory blending rules and regulatory frameworks, but circular feedstock supply remains heavily dependent on overseas sources. This is precisely why waste vinyl and waste plastic technologies deserve focused attention — though one important caveat must be acknowledged: Not all waste plastic pyrolysis technologies deliver equal value.

Conventional pyrolysis has primarily produced heavy-grade oil, typically blended with crude as a supplementary input. Recently, however, a new technology pioneered by City Oil Field has been commercialized in Korea, marking a significant departure from this norm. By controlling reactions at relatively low temperatures through a noncombustion process, it minimizes impurities and eases downstream processing — enabling, for the first time, the stable and environmentally sound production of naphtha-grade circular feedstock.

The implications are significant. Even without crude oil, naphtha-grade material capable of producing vinyl and plastic products can be generated from discarded waste alone. Whether this feedstock is reintroduced as plastic raw material to establish a true virtuous cycle will determine its full industrial value. Beyond serving as a supplementary response to the naphtha supply crisis, this technology could mark a turning point in reducing greenhouse gas emissions, stabilizing industrial structures and ultimately improving quality of life.

The path forward is clear. At the national level, quality standards for naphtha-grade circular feedstock should be categorized by grade — similar to classifications applied to gasoline, diesel and kerosene — and mandatory usage requirements should be institutionalized to match feedstock with appropriate end uses. Just as bio-based fuels benefit from government support, circular feedstocks derived from waste vinyl and plastics require equivalent policy frameworks: Usage-based incentives, carbon-reduction recognition and certification linkages.

With these foundations in place, Korea — a nation with no oil reserves of its own — has every reason to become a globally recognized model of energy self-sufficiency in naphtha production and circular feedstock.

Jeong Young-hoon is CEO of City Oil Field.