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S-OIL to complete Onsan refinery expansion by June 2011
13
Jun '09
S-OIL Corporation held a groundbreaking ceremony for the “Onsan refinery expansion project” at its Onsan factory (location: Ulju-gun, Ulsan) on Jun. 11 (Thu.). The ceremony was attended by S-OIL's CEO Ahmed A. Subaey, mayor of Ulsan metropolitan city Bak Maeng-woo and other 300 distinguished guests.

The Onsan refinery expansion project is a large-scale project that S-OIL set up to create a new growth engine for its future. Under the project, the refiner invests a total of 1.4 trillion won to construct facilities for producing 900,000 tons of para-xylene and 280,000 tons of benzene a year. The facilities are built on an 184,500m2 site and are to be completed by June 2011.

In 2011, when the petrochemical production facilities are completed, S-OIL's para-xylene and benzene production capacities will more than double to 1,600,000 tons and 580,000 tons a year, respectively. The Company also expects its operating income ratio to increase by roughly 20% beginning in 2012.

Furthermore, it plans to raise its refining capacity to 630,000 barrels per day from the current 580,000 barrels per day in order to additionally secure naphtha, a feedstock for petrochemical production.

S-OIL CEO Subaey said at the ceremony, “Coexisting and growing with local communities is one of our core values. We'd like to realize this value, by helping invigorate local economies through the direct and indirect creation of jobs during and after our project period.” The Onsan refinery expansion project, he added, is not a simple expansion of a factory, but will become a good opportunity for S-OIL to make its future growth engines more powerful and achieve higher economic performance as a global market leader, thereby further contributing to the growth of national and local economies.

Currently, S-OIL is capable of producing 700,000 tons of para-xylene, 300,000 tons of benzene and 200,000 tons of propylene a year. Considering that total domestic para-xylene production is 4,140,000 tons a year, S-OIL will play a bigger role in petrochemical market from 2011.

Benzene, which is produced by reforming naphtha in the crude oil refining process, becomes a basic feedstock for a variety of petrochemical products including synthetic resin while para-xylene, which is produced from toluene and xylene, is used as a feedstock for synthetic fibers.

“We set up this project to cope with growing demand for petrochemical products from China and other Asian regions in the future,” said an official at S-OIL.

“Taking advantage of our accumulated expertise in process technology and experience in operating petrochemical production facilities, we'll complete state-of-the-art facilities safely with a minimum investment and in the shortest possible period.”

There is a general consensus among industry insiders that the global petrochemical market will rebound from 2011. Saying this, S-OIL forecast that para-xylene demand would continue to increase in Asia, driven by the steady growth of China's polyester industry, but that para-xylene supply would not meet demand due to the Chinese government's strict control on investments, etc.

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