By Choi Sung-jin
Despite uncertain international oil prices, Lotte Chemical has decided to jump into the ethane cracker business jointly with a U.S. partner, the company said.
Lotte Chemical, which aims to reduce its reliance on naphtha and expand business based on gas, will be the first Korean petrochemical company to engage in ethane cracking using shale gas produced in North America, it said.
The company's executive board approved investment plans on Thursday to build an ethane cracker center with annual capacity of 1 million tons, and an ethane glycol plant with a 700,000-ton capacity. Out of a total investment of $3 billion, Lotte's capitalization will amount to $860 million.
Lotte hopes the new project will increase its annual sales by $1.5 billion and expand its production of ethylene, widely called the "staple of petrochemical industry," and ethylene glycol to 3.7 million tons and 1.74 million tons, respectively.
Market watchers said Lotte's moves run counter to the industry's latest trend that goes back to naphtha cracking centers riding on low oil prices. Lotte officials say, however, they are looking well ahead, saying few can tell how global oil prices will move beyond 2019. "The latest decision reflects our company's strategy to maximize profits through diversifying base materials," a company official said.
Lotte's U.S. partner, Axiall Corp., is a petrochemical company that produces chemical goods and construction materials. It recorded yearly sales of about 5 trillion won ($4.27 billion) through making and selling windows, moldings and pipe fittings last year.
Despite uncertain international oil prices, Lotte Chemical has decided to jump into the ethane cracker business jointly with a U.S. partner, the company said.
Lotte Chemical, which aims to reduce its reliance on naphtha and expand business based on gas, will be the first Korean petrochemical company to engage in ethane cracking using shale gas produced in North America, it said.
The company's executive board approved investment plans on Thursday to build an ethane cracker center with annual capacity of 1 million tons, and an ethane glycol plant with a 700,000-ton capacity. Out of a total investment of $3 billion, Lotte's capitalization will amount to $860 million.
Lotte hopes the new project will increase its annual sales by $1.5 billion and expand its production of ethylene, widely called the "staple of petrochemical industry," and ethylene glycol to 3.7 million tons and 1.74 million tons, respectively.
Market watchers said Lotte's moves run counter to the industry's latest trend that goes back to naphtha cracking centers riding on low oil prices. Lotte officials say, however, they are looking well ahead, saying few can tell how global oil prices will move beyond 2019. "The latest decision reflects our company's strategy to maximize profits through diversifying base materials," a company official said.
Lotte's U.S. partner, Axiall Corp., is a petrochemical company that produces chemical goods and construction materials. It recorded yearly sales of about 5 trillion won ($4.27 billion) through making and selling windows, moldings and pipe fittings last year.
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