A view of SK Innovation’s plant in Incheon. (Photo: SK Innovation)

In 2014, SK Innovation poured 1.6 trillion won SK Energy Incheon Complex, a refinery facility center. The investment channeled into a chemical facility, not expanding refinery facilities.
The investment has transformed the Incheon complex into a value-added production facility capable of producing 1.3 million tons of para-xylene (PX). On the same year, SK Innovation and JX Energy, the predecessor of JXTG, joined forces in investing 936.3 billion won, respectively, to inaugurate Ulsan Aromatic Corp. (UAC), raising SK Innovation’s PX production capacity to top in Korea and sixth in the world. Riding on a surging demand on PX from China, SK Innovation has been cruising before the wind.
SK Innovation is on an expansion mode into the chemical sector, going beyond the conventional refinery business. In 2011, SK Innovation teamed up with SK Energy to establish SK Global Chemical Co. Starting with a 370 billion won investment on the year to construct a polyethylene plant with an annual capacity of 230,000 tons in Ulsan, SK Innovation has so far channeled a combined 4.668 trillion won.
The company has been expanding its overseas business portfolios. In 2013, SK Innovation became the first Asian company to enter the Chinese naphtha cracking business by establishing a joint venture with Sinopec in Wuhan. It took 3.3 trillion won, including 1.155 trillion won from SK Innovation, to construct an ethylene plant with an annual capacity of 800,000 tons.
The joint venture, which posted a profit in the first business year, reaped a combined 1.6 trillion won in operating profit for four years. SK Innovation invested more than 300 billion won to acquire Dow Chemical’s polyvinylidene chloride (PVDC)and ethylene acrylic acid (EAA) businesses – the value-added chemical product businesses – through its affiliate SK Global Chemical.
Not only SK Innovation but also global refineries are scrambling to invest big into the chemical sector. Of late, global refineries like Exxon Mobile and Sinopec follow suit in making massive investments in the chemical sector. Exxon Mobile, the world’s largest refinery, which had an annual ethylene production capacity of 7.6 million tons in 2010, plans to expand its capacity to 10 million tons by 2020. Sinopec plans o elevate its ethylene production capacity form the current 7 million tons to 9 million tons.
Korean refineries are following the trend. In May, Hyundai Oil Bank announced a plan to team up with Lotte Chemical to set up Hyundai Chemical, a joint venture.
The plan calls for investing 2.7 trillion won to build a new heavy feed petrochemical complex (HPC). GS Caltex also decided to expand an olefin production facility near the 2nd plant in Yeosu by investing a combined 2 trillion won. The new facility will be capable of producing 700,000 tons of ethylene and 500,000 tons of polyethylene annually.
The plan calls for breaking ground next year and launching commercial operation in 2022. S-OIL is implementing the larger project since its establishment.
The project consists of the construction of RUC( Residue Upgrading Complex) which the latest refinery technology will be applied and ODC(Olefin Downstream Complex) which will utilize the competitive raw material produced in RUC. Through this project, S-OIL is expected to significantly improve profitability and also secure the industry-leading competitiveness by converting low-value residue to high-value products: gasoline and olefine downstream product.