South Korea’s Hyundai Oilbank announced on 9 May that it has signed a memorandum of agreement (MOA) with Lotte Chemical Corp. to build a new heavy feed‑based petrochemical complex (HPC) through their existing joint venture, Hyundai Chemical Corp.

Hyundai Chemical is owned 60% by Hyundai Oilbank and 40% by Lotte Chemical, but the ratio of investment in the new plant will be decided later.

The new petrochemical plant will produce 750,000 tons of polyolefins and 400,000 tons of olefins a year, using heavy fuel oil as a feedstock.

The new plant, which is scheduled to start commercial operations in late 2021, is valued at KRW 2.7 trillion (USD 2.5 billion).

Under the agreement, Hyundai Oilbank and Lotte Chemical will invest fresh funds in Hyundai Chemical to build a new plant in Daesan, where Hyundai Oilbank’s refining facilities are located. Hyundai Chemical will also inject its own funds into the new project.

Hyundai Oilbank Co. has been seeking to expand its non-refining activities to reduce its heavy reliance on its mainstream businesses. The company aims to increase the ratio of its non‑refining business to operating profit to 40% in 2020 from 32% in 2016 by expanding its petrochemical business.

With the latest joint venture project with Lotte Chemical, Hyundai Oilbank will be able to achieve vertical integration of its oil refining and chemical business, with its products ranging from petroleum products, such as gasoline and diesel fuel, to aromatic products, including benzene, and olefin-based petrochemical products. Hyundai Oilbank also has a joint venture with Shell to produce lubricating base oils.