Petrochemical companies expand with non-oil based chemical plants in South Korea

South Korea's petrochemical companies, which depend on oil as a traditional energy resource, are expanding their non-oil based chemical businesses, as per businesskorea.co.kr. Petrochemical makers have expanded with non-oil based chemical plants, using natural gas, shale gas, and condensate and liquefied petroleum gas (LPG) from naphtha-based plants, as feedstock. Domestic petrochemical companies are diversifying raw materials in a bid to overcome competitive disadvantages with oil-producing countries that have cost competitiveness like the Middle East and the U.S. Also, it is a structural change, considering the stabilization of the supply and demand of raw materials and business diversification. Hyosung is expected to complete the extension of its Yongyeon plant in Ulsan to produce propylene, which was an investment of 280 billion won (US$253.97 mln) in 2013, by Q3-2015, increasing propylene production capacity from 200,000 tons to 500,000 tons through the extension. Lotte Chemical is preparing to build natural gas-based chemical plants in Surgil, Uzbekistan. The company invested US$338 mln (372.65 bln won) in a project in which the Uzbek government also participated. Upon completion, Lotte Chemical will produce 390,000 tons of high-density polyethylene (HDPE) and 80,000 tons of polypropylene (PP) based on locally-produced natural gas. Aiming to start operations next year, Lotte is also establishing a condensate-based mixed-xylene (MX) plant in Daesan, South Chungcheong Province, in cooperation with Hyundai Oilbank. Also, Lotte Chemical will complete a plant that produces shale gas-derived ethane in the U.S. by 2018. Last year, Samsung Total and SK Incheon Petrochem constructed and started operating condensate-based paraxylene (PX) plants, which were partially produced from natural gas, in a bid to increase the production volume by 1 million tons and 1.3 million tons, respectively. LG Chem is jointly building a natural gas-based petrochemical plant in Kazakhstan with state-owned Kazakhstan Petrochemical Industries (KPI). The company decided to invest a total of US$4 billion (4.41 trillion won) in the plant in a bid to produce 840,000 tons of ethylene and 800,000 tons of polyethylene (PE) in 2011. However, LG Chem postponed the commercial operation time from H1-2017 to 2019, due to the recent drop in oil prices and the increase in business expenses. SK Gas is constructing an LPG-based propylene production plant in Ulsan, aiming to start operation next year. And S-Oil Corp. is planning to complete the Olefin Downstream Complex (ODC) project, which produces propylene using residue, by 2017.