HPC to Start Test P Operations in September
Lotte Chemical is pushing to maximize cost competitiveness by expanding the raw materials for its petrochemical plants from shale gas and liquefied petroleum gas (LPG) to residues.
A heavy feed petrochemical complex (HPC), built jointly with Hyundai Oilbank, is scheduled to start test operations in September before beginning commercial production at the end of the year. This complex uses heavy oil, which is residual oil, as its main ingredient.
HPC dramatically lowers costs compared with current naphtha cracking centers (NCCs). It minimize the use of naphtha and instead uses oil refinery byproducts such as desulfurized heavy oil, by-product gas and LPG, which are cheaper than naphtha. Lotte Chemical’s HPC is expected to boast the highest cost competitiveness in Northeast Asia.
Desulfurized heavy oil is more than 20 percent cheaper than naphtha. It is a raw material produced by only three oil refineries worldwide, including Hyundai Oilbank. It is a semi-finished product with intermediate properties of diesel and bunker C oil and has fewer impurities.
Lotte Chemical is also pushing to increase cost competitiveness by using shale gas and LPG as raw materials. It is the first Korean chemical company to build a production base in the United States. It produces ethylene through an ethane cracker center (ECC), which uses shale gas-based ethane. ECCs have higher cost competitiveness than NCCs. By running the ECC, Lotte Chemical's U.S. subsidiary (LC USA) recorded an operating profit ratio of 30 percent in the second quarter.
Lotte Chemical’s plant in Uzbekistan, which was built by forming a consortium with Korea Gas Corp., also produces ethylene using locally produced natural gas. This is a good example of securing competitiveness through regional as well as raw materials diversification.
Lotte Chemical is also seeking to improve efficiency by increase the use of LPG instead of naphtha for ethylene production at its plants in Yeosu and Daesan. It plans to increase LPG use at its ethylene production facilities in Korea from the current 20 percent to about 40 percent by the end of 2022, and up to 50 percent in the future.