Hyundai Oilbank has completed an agreement with fellow South Korean downstream firm Lotte Chemical to jointly build a petrochemical plant at Hyundai’s refining complex in Daesan.
The Hyundai Chemical joint venture, which is 60% owned by Hyundai Oilbank and 40% by Lotte, plans to finish construction of its new heavy feedstock-based petrochemical complex (HPC) by the first half of 2021, Lotte said. The complex will cost an estimated 2.7 trillion won (USD 2.27bn) and will have the capacity to produce 750,000 t/yr of ethylene, 750,00 t/yr of polyethylene and 400,000 t/yr of polypropylene.
Hyundai Oilbank sees the HPC generating higher profits than naphtha-fed crackers of a similar scale, at least partly because it will use heavy fuel oil as a feedstock. Heavy fuel oil prices are expected to drop next year as new International Maritime Organisation rules cut sulphur content in marine fuels.
Final sanctioning of the HPC follows a preliminary agreement signed by the companies last year and comes amid a polymer building boom in South Korea. The country’s refiners and petrochemical companies are involved in projects that will increase South Korean ethylene production capacity by more than half, to almost 14mn t/yr, by 2023.
Saudi Arabia’s state-owned Saudi Aramco has already agreed to buy a 17% stake in Hyundai Oilbank from its parent, shipbuilding group Hyundai Heavy Industries Holdings, for W1.37 trillion. Aramco is in the process of buying a 70% interest in state-owned petrochemicals producer Sabic for USD 69.1bn.
Lotte is 88% owner of a joint venture with Atlanta-based Westlake subsidiary Axiall that earlier this month started commercial operations of a 1mn t/yr ethane cracker in the US’ Louisiana.