Saudi Aramco laid the foundation stone for the largest petrochemical project in South Korea, with investments amounting to $7 billion.
Korean President Won Seok Yul participated in the laying ceremony of the foundation stone for the Shaheen project, which is being implemented by S-Oil, a subsidiary of the Saudi oil giant.
Saudi Aramco announced the project last November, on the sidelines of Saudi Crown Prince Mohammed bin Salman’s visit to Seoul, according to data seen by the specialized energy platform.
The project is its largest investment ever in South Korea. It includes a project to develop a world-class integrated steam cracking facility for petrochemicals through S-Oil, with investments estimated at 9 trillion won ($6.8 billion).
The largest investment in Korea
The Aramco project is the largest project in terms of the volume of foreign investment in South Korea, according to data seen by the specialized energy platform.
S-Oil said it held a groundbreaking ceremony for the Shaheen project at its factory in the southeastern city of Ulsan, according to Yonhap News Agency.
300 officials, headed by the Korean President, Minister of Industry, Trade and Energy, Mayor of Ulsan, CEO of S-Oil Hussein Al-Qahtani, and CEO of Saudi Aramco, Amin Nasser, participated in the ceremony.
The project, known as Shaheen, aims to use innovative technology for the first time to convert crude oil into petrochemical feedstocks. This will mark the first commercialization of thermal cracking crude oil-to-chemicals technology from Saudi Aramco and Lumos Technologies; This increases petrochemical production and reduces operating costs.
The project follows a previous investment of $4 billion in the first phase of the petrochemical expansion project, which was completed in 2018.
Saudi Korean cooperation
President Yoon congratulated the company on starting the Shaheen project, describing it as a representative achievement in the Korean-Saudi economic cooperation, and expressed his support and encouragement for a new leap for S-Oil and the city of Ulsan.
The cost of the Shaheen project, the second phase petrochemical project being implemented by S-Oil, is about 9.3 trillion won ($7 billion) for the construction of petrochemical facilities; Including the steam cracking unit in Ulsan.
The project is expected to be completed to build facilities at the Unsan Industrial Park in Ulsan, by June 2026.
The Shaheen project will build a steam cracker and other units to produce petrochemical feedstocks such as ethylene, naphtha for plastics and other synthetic resins.
The Shaheen project is expected to play a pivotal role in diversifying S-Oil’s business, which focuses on fuel oil. The share of petrochemicals will increase from the current 12% to 25% in the company’s business portfolio upon completion of the project.
Aramco’s huge investments
The Shaheen project represents the largest ever investment in South Korea by S-Oil’s largest shareholder, Saudi Aramco.
The total investment, including 4.8 trillion won in 2018 in the first-phase oil refining and petrochemical facilities construction project, is 14 trillion won ($10.59 billion).
“We have taken the first step in a long journey with the belief that now is the best time to invest in preparing for the future,” said Hussain Al-Qahtani, CEO of S-Oil.
“The Shaheen project will further enhance our efforts to drive innovative growth across the commercial value chain as well as expand our business portfolio into petrochemicals,” Yonhap reported.
The Shaheen project is expected to give impetus to the city of Ulsan, and the manufacturing industries in general. S-Oil said the project will create a maximum of 17,000 jobs per day at the peak of the construction process, and after the project’s completion, it will create more than 400 regular jobs and add value to the economy of 3 trillion won ($2.27 billion).
demand for petrochemicals
The project is expected to increase the supply and demand stability of raw materials in the country’s petrochemical industry, and more than double the ethylene production capacity in Ulsan.
S-Oil said that TC2C technology, which converts crude oil into chemicals for steam cracking, contributes to reducing carbon emissions.
The project will have the capacity to produce up to 3.2 million tons of petrochemicals annually, and will include a facility to produce high-value polymers; The steam cracking facility is expected to process by-products from ore processing; Including naphtha and gas coming out of the refinery, to produce ethylene, a petrochemical building block used to make thousands of everyday items. The project will also produce propylene, butadiene and other basic chemicals.
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