S-Oil approves USD7 billion petrochemical expansion project

South Korean oil refiner S-Oil Corporation will invest KRW9.258 trillion (USD6.9 billion) to expand its petrochemical business. On November 16, the board of directors of S-Oil approved the so-called “Shaheen” or falcon project, the second phase of the company’s petrochemical expansion. The first phase was completed in 2018 at a cost of USD4 billion.

The project will include a steam cracker at the Ulsan plant, which will produce high value-added petrochemical products such as ethylene, propylene, butadiene, and benzene. It will also produce polyethylene, which is used as a raw material for synthetic materials including plastics. Annual production will be 3.2 million tons.

Construction of the steam cracker is scheduled to begin in 2023 and will be completed in 2026. Upon completion, S-Oil’s petrochemical production will increase to 25% from the current 12%. 

“We are taking the first step in a long journey for development. The Shaheen project will contribute to expanding our business portfolio into petrochemicals and achieving industry-leading energy efficiency,” said Hussain Al-Qahtani, CEO of S-Oil.

The approval of the project was timed with the visit to Seoul by Mohammed bin Salman, the crown prince and prime minister of Saudi Arabia. Saudi Arabian Oil Company (Saudi Aramco) owns a 63.4% stake in S-Oil through its subsidiary Aramco Overseas Company (AOC). Aramco’s largest shareholder is Crown Prince bin Salman.

Aramco’s Thermal Crude-To-Chemicals (TC2C) technology, which will be commercialized for the first time through the Shaheen project,  will be applied to the steam cracker to be built in Ulsan. TC2C is a process that decomposes low value-added heavy oil products in existing oil refineries and converts them into raw materials for steam crackers.