Hyundai Oilbank Completes SDA Facility to Enhance Operational Efficiency

Hyundai Oilbank is close to completing an 800 billion won project to expand and upgrade its refining facilities.

Hyundai Oilbank said on Aug. 12 that the company has completed a solvent de-asphalting (SDA) facility at a cost of 240 billion won. In February of last year, the company began to build the SDA facility, which filters asphaltene components off from residual oil produced at refining facilities. Hyundai Oilbank plans to ramp up production of high-value-added products such as gasoline, diesel, and jet aircraft fuels by using deasphalted oil (DAO) as a raw material.

Hyundai Oilbank will also expand refining and upgrading facilities at Daesan Plant No. 1 in South Chungcheong Province during a regular maintenance period which began on August 10. The expansion work, which will cost about 250 billion won, is expected to be completed around the middle of next month.

Accordingly, Hyundai Oilbank is expected to wrap up the 800 billion won project to raise the efficiency of its refining facilities by the third quarter of this year and start full-scale production. The project included expansion of the upgrading facilities of the second plant last year at a cost of 300 billion won.

Once the expansion project is completed, Hyundai Oilbank's refining capacity will climb to 650,000 barrels per day. Its gap with S-OIL (670,000 barrels), the third largest refinery in Korea, will be narrowed down to 20,000 barrels. Its upgrade ratio is 40.6%, the highest among Korean oil refiners. Hyundai Oilbank is the only Korean oil refiner that has an upgrade ratio of more than 40%.

Last year, Hyundai Oilbank posted an operating margin of 7.7%, ranking first among Korean oil refiners. Based on its solid profit structure, the company is continuing to make massive investments. In May, Hyundai Oilbank decided to build a heavy feed petrochemical complex (HPC) capable of mass-producing polyethylene and polypropylene by spending 2.7 trillion won in partnership with Lotte Chemical.

Hyundai OCI, a carbon black plant built at a cost of 220 billion won, commenced its commercial operation in February. Additional investment is also expected. There is a limit to increasing facilities at Daesan Plant in South Chungcheong Province, and the ratio of upgrading the plant reached the highest level, which means that it is highly likely that Hyundai Oilbank will invest in the non-refining sector such as petrochemicals and lubricants.

Smooth work to raise efficiency and upgrade facilities coupled with an improvement in earnings has made the prospects for the company’s successful IPO slated for this October brighter.