Lotte Group Vice Chairman Huh Soo-young, head of the group’s chemical business unit, and Hyundai Heavy Industries Holdings Vice Chairman Kwon Oh-gap hold each other’s hand with other Hyundai Oilbank and Lotte Chemical officials at a ceremony to sign a deal on the construction of the Heavy Feed Petrochemical Complex (HPC) at Lotte Hotel in downtown Seoul on May 9. (Photo: Hyundai Oilbank)

Hyundai Oilbank has joined forces with Lotte Chemical to implement a new petrochemical project valued at 2.7 trillion won. Hyundai Oilbank’s production of petrochemical items combined with Lotte Chemcal’s technology power is expected to max out synergetic effects of Hyundai Chemical, a joint venture of the two companies.
Hyundai Oilbank and Lotte Chemical signed a deal on the construction of the Heavy Feed Petrochemical Complex (HPC) at Lotte Hotel in downtown Seoul on May 9. Under the deal, the joint venture Hyundai Chemical will unveil in the second half of this year the design of the plant, whose commercial operation is slated to start in late 2021. The new plant will be built on a lot covering about 500,000 sq. meters at Hyundai Oilbank’s plant in Seosan, Chungcheongnam-do.
Among those present at the signing ceremony were Hyundai Heavy Industries Holdings Vice Chairman Kwon Oh-gap, Hyundai Oilbank President Moon Jong-bak, Lotte Group Vice Chairman Huh Soo-young, head of the group’s chemical business unit, and Lotte Chemical President Kim Gyo-hyun.
The HPC facility can significantly improve unit prices compared to the conventional facilities using naphtha, since the former uses oil residue as a raw material. The heavy upgrade facility will produce 750,000 tons of ethylene annually, which can lead to production of 750,000 tons of polyethylene and 400,000 tons of polypropylene per annum.
The petroleum products from the new plant will be exported. It is expected to boost exports to 3.8 trillion won annually and log 600 billion won in operating profit. The operation of the facility in the Seosan area will have direct and indirect impact of hiring more than 1,500 people.
Hyundai Oilbank and Lotte Chemical have chosen a format that will essentially make additional investments into the existing joint venture Hyundai Chemical. Hyundai Chemical, which went into operation in 2016, posted 285.1 billion won in operating profit. The joint venture will use retention money to raise its capital. If the HPC facility is operated as planned, it will contribute to Hyundai Chemical’s improving about 200 billion won in profitability.
Hyundai Chemical can lower unit prices by using a minimum of naphtha from refining crude oil and replacing more than 60 percent of the raw material amounts with less-expensive desulfurized oil residue, a by-product gas and others. The HPC facility, using raw materials with less impurities, can secure stability at a stage of early operation, a Hyundai Chemical official said.
Hyundai Oilbank President Moon said, “This project will enable Hyundai Oilbank to achieve a vision of rising to an integrated energy company through diversifying business portfolios.”
Hyundai Oilbank will see the portion of revenues from the non-refinery sector surge from 33 percent to 45 percent, he said. Hyundai Oilbank, which chalked up 1.26 trillion won in operating profit in 2017, aims to raise the figure to 2.2 trillion won by 2020 in its consolidated statement.
Lotte Chemical has proved to be a successful company in the global petrochemical market. The company is ranked 7th in the world in terms of producing ethylene. Lotte Chemical has a network of operations and branch offices around the world, including in emerging countries in Southeast Asia, to give products from the joint venture easy access to the global market.
Lotte Chemical President Kim said, “Hyundai Oilbank and Lotte Chemical share Hyundai Chemical’s success DNA.” The joint venture, making the most of the strengths of a refinery and a chemical company, will be Korea’s first success story involving a refinery and a chemical company, he added.