S-Oils Shaheen Project on track as it shi... > 경제기사 | economics

South Korea’s oil refining company S-Oil Corp. is making a strategic shift toward petrochemicals, its new growth area, after having focused on the refining business for decades.

The focal point of the initiative is the Shaheen Project, which broke ground in March 2023.


The project, named after Saudi Arabia’s national bird, Shaheen, the falcon, signals S-Oil’s ambition to rebound through petrochemicals amid uncertainty rising in the refining industry due to global decarbonization trends.

The Shaheen Project’s overall engineering, procurement, and construction EPC process is currently at 40 percent.

Maeil Business Newspaper visited the construction site of the project in the Onsan National Industrial Complex off the coast of Ulsan in southeastern Korea on Tuesday.

From the observatory overlooking the project, eight steam crackers were visible, each 10 meters wide, 40 meters long, and weighing 3,200 tons, positioned in the middle of the 881,000 square meter site.

These steam crackers, designed to break down naphtha and produce basic petrochemical materials, are set to produce 1.8 million tons of ethylene annually, making the site the largest single facility of its kind in the world.

The site, which will eventually house facilities for naphtha and polymer production, resembled a small city in the making.

The total investment in the Shaheen Project amounts to 9.26 trillion won $6.72 billion, making it the largest petrochemical investment project in Korea.

It is also the largest investment in Korea by Saudi Arabia‘s state oil company Aramco, S-Oil’s major shareholder.

“It is no exaggeration to say that S-Oil’s fate rests on the success of the Shaheen Project,” said an official from the company.

The core of the Shaheen Project is vertical integration, meaning the company will internally supply all the raw materials for the process, from crude oil to naphtha, ethylene, and ultimately polyethylene.

This is in contrast to other petrochemical companies, which often have to procure naphtha externally, let alone crude oil.

At the bottom of this vertical integration is the thermal crude to chemical TC2C facility, which extracts key petrochemical raw materials directly from crude oil.

“The TC2C facility is designed to maximize naphtha extraction compared to traditional refining facilities, which produce a variety of by-products,” said Chung Dong-gun, head of project procurement, management, and coordination at S-Oil.

The naphtha produced at TC2C is transported in liquid form to the steam crackers.

The ethylene produced at the steam crackers is transferred to polymer production facilities within the Shaheen Project complex, where it is processed into high-value-added polyethylene and then exported.

“Compared to traditional petrochemical companies, we can reduce costs related to transportation, customs, and production,” said an S-Oil official.

Petrochemicals currently account for 12 percent of S-Oil’s business portfolio, but once the Shaheen Project is completed, this figure is expected to more than double to 25 percent.

The government and business associations are also providing support.

The Ulsan city government is actively facilitating the permitting process, and the Federation of Korean Industries has consistently called for improvements to the temporary investment tax credit system to support large-scale investment projects.

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