S-Oil Expanding Business from Oil Refining to Petrochemicals
S-Oil is planning to expand its business from oil refining to petrochemicals based on its new residue upgrading complex (RUC) and olefin downstream complex (ODC) built at an investment of approximately five trillion won. In addition, the company is going to complete its steam cracker and olefin downstream (SC&D) project by 2024 by investing seven trillion won.
S-Oil celebrated the completion of construction of the facilities at the Shilla Hotel in Seoul on June 26. The ceremony was attended by South Korean President Moon Jae-in and Crown Prince of Saudi Arabia Mohammad Bin Salman bin Abdulaziz Al Saud. The facilities are to turn crude oil residue into gasoline and propylene and turn them into polypropylene and propylene oxide, which are high value-added petrochemical products. The planned annual production volumes are 405,000 tons and 300,000 tons, respectively. The facilities, located in Ulsan City, were put into operation in November last year.
Based on the RUC, S-Oil raised its crude oil residue conversion ratio from 22.1 percent to 33.8 percent. Also, it lowered its ratio of cheap heavy oil products such as bunker C and asphalt from 12 percent to 4 percent. The RUC was built based on the technology of JX Nippon, Axens and Saudi Aramco, which owns 63.4 percent of S-Oil. The South Korean company is expecting that the RUC will boost its profitability in relation to the International Maritime Organization’s ship fuel sulfur content regulations scheduled to become effective in January 2020.
The ODC, in the meantime, is strengthening S-Oil’s petrochemical product portfolio by more than quadrupling the ratio of olefin products to 37 percent. “The new and cutting-edge high severity fluid catalytic cracking unit, which has raised our propylene yield to as high as 25 percent, is very competitive in terms of cost as it uses high-sulfur residue, which is cheaper than crude oil,” the company explained, adding, “Our petrochemical sales ratio has risen from 8 percent to 13 percent based on the new facilities.”
On June 25, S-Oil and Saudi Aramco signed a memorandum of understanding for the SC&D project. The purpose of the project is to produce 1.5 million tons of ethylene and other petrochemical raw materials a year from naphtha and byproduct gases and produce high value-added petrochemical products such as polyethylene and polypropylene from olefin. These production activities are expected to contribute greatly to S-Oil’s profitability.
Saudi Aramco president and CEO Amin H. Nasser said at the ceremony that Saudi Aramco is very much willing to further deepen its partnership with South Korea.