President Moon Jae-in, 6th R, joins Saudi Crown Prince Mohammad bin Salman, 7th R, and other guests at a dedication ceremony for the S-Oil’s new petrochemical plants held on June 26 at Dynasty Hall of the Hotel Silla in Seoul. (Photo on the courtesy of Cheong Wa Dae website)

S-Oil Corp., a major refiner in South Korea owned by Saudi Aramco, said it has completed the construction of petrochemical production facilities in South Korea, which will help further raise its presence in the non-refining business field.

In 2015, S-Oil, the third-largest refining firm in the country, started a $4.2 billion project to build residue upgrading complex (RUC) and olefin downstream complex (ODC) in Ulsan, some 414 kilometers from Seoul.

“The successful completion of the largest-ever project in Korea's refining and petrochemical industry marks an innovative transformation for S-Oil.” said Kim Chul-su, chairman of S-Oil's board of directors, at the inauguration ceremony for the facilities in Seoul, which was also attended by South Korean President Moon Jae-in and Saudi Arabia's Crown Prince Mohammed bin Salman.

“It ushers the company into petrochemical downstream aimed at driving integration with petrochemical and securing future growth engine.” he said.

The new complex, which took three years to build, consists of a high severity fluid catalytic cracking unit with a capacity of 76,000 barrels per day, a residue hydrodesulfurization unit with a daily capacity of 63,000 barrels, a propylene oxide plant, a polypropylene plant and eight other facilities, including storage tanks.

RUC is an upgrading facility that reprocesses low-value residue oil, such as heavy fuel and asphalt, into gasoline and propylene. ODC treats propylene and converts it into high value petrochemical products like polypropylene and propylene oxide.

Such facilities will expand its business portfolio and raise its petrochemical portion from 8 percent to 13 percent, according to S-Oil. S-Oil said the new facilities will help raise its profitability as its portion of heavy fuel, such as bunker C and asphalt, which are sold at a lower price than crude oil, will go down from 12 percent to 4 percent.

The company claimed that the new RUC will also lift its upgrading ratio at the top of the rank among South Korean refiners from 22.1 percent to 33.8 percent. S-Oil said it will further drive its transformation by launching its second major petrochemical project with Saudi Aramco, the world's largest oil company that is also the top shareholder of S-Oil with a more than 63 percent stake.

Early this week, S-Oil and Saudi Aramco signed a memorandum of understanding to launch a $6 billion steam cracker and olefin downstream project. Under the agreement, S-Oil will build a steam cracker that produces ethylene and other basic chemicals out of naphtha and refinery off-gas, as well as olefin downstream facilities in Ulsan by 2024.

“The two parties also agreed to work together on commercializing TC2C (thermal crude to chemicals) technology.” S-Oil said.

“The new project will help S-Oil solidify its global position in the aromatic and olefin sector.” S-Oil is Korea's third-largest oil refiner. It posted 5.42 trillion won ($4.6 billion) in sales and an operating profit of 255 billion won in the first quarter of the year.

A view of the new petrochemical plants dedicated at S-Oil’s Ulsan Oll Complex in Ulsan. (Photo: S-Oil)