GS Caltex will make a massive investment to build a two-trillion-won (US$1.8 billion) petrochemical facility at Yeosu Plant in South Jeolla Province, South Korea. This investment aims to produce olefin products such as propylene and ethylene, basic raw materials for petrochemicals by decomposing naphtha and other products and enable GS Caltex to grow into a general energy company by turning away from the current oil refining-oriented business structure.
GS Caltex said on February 7 that the company decided to build an olefin production facility capable of producing 700,000 tons of ethylene per year and 500,000 tons of polyethylene annually by investing about 2 trillion won (US$1.8 billion) in a 430,000-square-meter site near its second plant in Yeosu, South Jeolla Province.
The investment is expected to be finalized at a board meeting at the end of this month after an agreement with Chevron, a partner of GS Caltex. "We will start work to design the facility this year and break ground in 2019," said an official of GS Caltex.
The olefins facility in the works is a mixed feed cracker (MFC) facility. MFC is a facility for producing ethylene and propylene among others which are basic materials for petrochemical products. In terms of facility systems, the facility differs from petrochemical companies’ naphtha cracking centers (NCCs) which mainly use naphtha as a raw material. In addition to naphtha, MFC has the advantage of being able to use various oils and gases such as liquefied petroleum gas (LPG) and by-product gas produced in the refinery process as raw materials.
According to market researcher IHS, the global polyethylene market is 100 million tons per year, accounting for the largest share of the total olefins market (260 million tons). The growth of global polyethylene demand is stable at an annual average of 4.2%.
"The decision to invest in MFC facilities was made to build a balanced business portfolio by entering the olefin business which has strong growth potential and can expand into a variety of downstream business items,” a GS Caltex official said. “We reached the decision in accordance with our long-term growth strategy to pursue sustainable growth in the future such as diversifying our business portfolio centered on oil refining and aromatics and pruning profit volatility.”