59th GS Caltex Expanding Boundaries Overseas
Leading Refiner Spearheading Export Fleet
By Kim Hyun-cheol
Staff Reporter
Refiners have been a solid base for South Korea's exports in recent years, with local firms rolling up their sleeves to tap markets outside Korea.
GS Caltex, the second-largest company here, is especially noted for its growth in foreign markets, which is in line with the globalization plan of its parent group GS.
In March 2007, GS Group announced the ambitious move of going global in celebration of the second anniversary of its foundation. Overseas sales will make up more than 50 percent of those in all its affiliates, GS said in a long-term blueprint for management strategies.
What GS Caltex has been achieving so far would make it a near-perfect spearhead of the plan. The company made 11.2 trillion won ($9.3 billion) from overseas sales in 2007 ― 51 percent of the total ― and raised the proportion to 57 percent with 34.4 trillion won in sales last year.
This year has been tough for refiners so far, due to a drop in prices of petroleum products in international markets as well as the company's contraction in production in the wake of scheduled maintenance of its facilities. Exports, however, still accounted for some 54 percent of sales in the first half of 2009.
Created in 1966, GS Caltex is a joint venture between South Korean company GS Holdings and U.S. oil giant Chevron. Caltex was created in 1936 as an overseas joint venture between Chevron and Texaco, and was absorbed when Chevron acquired Texaco in 2001. In 2004, GS Holdings was spun off from LG Corp.
In 2005, the company was reborn as GS Caltex in the wake up of the separation of GS Group and LG Caltex from LG.
Currently GS Caltex is exporting high-value products from its state-of-the-arts facilities, including a refining plant with a daily capacity of 820,000 barrels and a 150,000-barrel fluid catalytic cracking site, to Asia-Pacific countries, and North and South America.
It is also devoted to further market expansion and outbound shipments, as well as destination diversification.
Now equipped with a slew of high-tech facilities, GS Caltex sees its future prospects overseas in a more positive light.
Exports of high-quality light oil have been rising since last year, largely thanks to the stable operation of its second cracking facility, the construction of which was completed in 2007.
A new 3-trillion-won heavy-oil upgrading unit project is aimed to be finished by 2010, its largest investment in history. Once completed, the new plant is expected to put GS Caltex ahead of all other Korean refineries with an output capacity of 266,000 barrels per day.
Also, starting from 2003, the company's oil exploration business has seen constant expansion, now holding shares of oilfields in Cambodia, Thailand and Vietnam. In the long term, GS Caltex plans to get up to 10 percent of its daily refining needs through its own exploration work.
Export projects have varied from the company's traditional business route. GS Caltex owns the world's largest facility for aromatic compounds, which produces 2.8 million tons annually, and exports products such as benzene and toluene to Asian countries.
Lubricant oil is also emerging as a key item for the company since it launched commercial production of lubricating base oils at its complex in Yeosu, South Jeolla Province, in 2007. Starting with a 9,000 ton sale to the Middle East in Nov. 2007, lubricant items of GS Caltex are exported all over the world.
From what it has done so far, GS Caltex is confident of its contribution to the national economy. ``Now we can safely say refining ranks among the leading exporting industries. Diversifying exporting destinations and maximizing the outbound amount lead to making more of a contribution to the Korean economy,'' said Hur Dong-soo, CEO of GS Caltex.
As well as strengthening its businesses in the existing oil and chemical sectors, the company is ceaseless in its efforts to push boundaries to a new variety of growth engines, which includes recycled energy and overseas resources exploration projects.
Embarking in China
GS Caltex's history of tapping into the Chinese market dates back to 2003, when the company turned its attention to the world's fastest growing economies, realizing that the energy market is becoming saturated both at home and abroad.
Its major push into the Bamboo Curtain started in 2006, when it acquired Langfang Jiashi Chemical, a Chinese polypropylene manufacturer and a supplier to Hyundai Motor, Kia Motors and LG Electronics for $4.3 million.
Langfang's sales have been steeply rising ever since the merger. It sold 10.5 billion won in 2005, but more than doubled to 25 billion won in 2006, then 56 billion won last year. The Chinese unit of GS Caltex is forecast to post sales over 63 billion this year.
In 2007, GS Caltex started to establish gas-contributing corporations in major cities including Qingdao, Jinan and Yantai in Shandong Province. Now, the refiner is operating a chain of gas pumps in those cities.
More than just stores of petroleum products, these gas stations have various subsidiary facilities including autiOasis, a maintenance arm of those shops, and auto car-washing services to offer advanced services to local Chinese customers. The company plans to gradually expand the business in China, based on its accumulated know-how in the domestic gas pumping business.
Foreign Exploration
GS Caltex initiated its oil field exploration business in 2003, by acquiring a 15-percent stake in the Cambodian Sea A-block from the global oil giant Chevron.
In 2006, it took over a 30-percent stake in an inland Thai block from a Japanese firm. After successful drilling work in the same year, the company plans to further review the profitability of the field by extending the exploration period.
GS Caltex has recently completed a seismic survey of the Vietnam 122 oil block, a 15-percent stake of which it acquired in 2007.
Ultimately, it aims to obtain up to 10 percent of its overall daily capacity from the overseas blocks it owns.
To reach this goal, GS Caltex is constantly attempting to beef up cooperation with major global energy firms, and also pressing with the expansion of its exploratory business to promising regions including Latin America and Southeast Asia.
GS Caltex initiated its oil field exploration business in 2003 by acquiring a 15-percent stake in the Cambodian Sea A-block from the global oil giant Chevron. A new 3-trillion-won heavy-oil upgrading unit project, construction of which is in progress in its facility complex in Yeosu, South Jeolla Province, will be finished by 2010 as its largest investment in history. Once completed, the new plant is expected to put GS Caltex ahead of all other Korean refineries with an output capacity of 266,000 barrels per day. GS Caltex expects its Chinese gas pumps business in Shandong Province to further expand in the world’s fastestgrowing economy.
GS Caltex initiated its oil field exploration business in 2003 by acquiring a 15-percent stake in the Cambodian Sea A-block from the global oil giant Chevron. A new 3-trillion-won heavy-oil upgrading unit project, construction of which is in progress in its facility complex in Yeosu, South Jeolla Province, will be finished by 2010 as its largest investment in history. Once completed, the new plant is expected to put GS Caltex ahead of all other Korean refineries with an output capacity of 266,000 barrels per day. GS Caltex expects its Chinese gas pumps business in Shandong Province to further expand in the world’s fastestgrowing economy.
GS Caltex initiated its oil field exploration business in 2003 by acquiring a 15-percent stake in the Cambodian Sea A-block from the global oil giant Chevron. A new 3-trillion-won heavy-oil upgrading unit project, construction of which is in progress in its facility complex in Yeosu, South Jeolla Province, will be finished by 2010 as its largest investment in history. Once completed, the new plant is expected to put GS Caltex ahead of all other Korean refineries with an output capacity of 266,000 barrels per day. GS Caltex expects its Chinese gas pumps business in Shandong Province to further expand in the world’s fastestgrowing economy.