South Korea's S-OIL Corporation Plans Expansion of Onsan Refinery with $1.12 Billion Investment

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Researched by Industrial Info Resources (Sugar Land, Texas)--S-Oil Corporation (OTC:SOOCY) (Seoul, South Korea) has started expansion operations at the company's Onsan Refinery in Ulsan, South Korea. The $1.12 billion venture, scheduled to be completed in 2011, comprises a paraxylene plant with a production capacity of 900,000 tons per day and a benzene plant with an output potential of 280,000 tons per day.

The two petrochemical plants, built using state-of-the-art technology on a land area of 184,500 square meters, will help the company meet future demand arising from Asia and China. The petrochemical sector is expected to witness a strong comeback from 2011 onwards. In addition, S-Oil's trend analysis reveals that the demand for paraxylene is set to steadily increase across Asia, mainly because of China's growing polyester industry. However, the supply of paraxylene to China from the upgraded plant is expected to be restricted because of the stringent investment policies of the local government.

Upon completion of the expansion activities at Ulsan, S-Oil's production potential will increase to more than twice its current capacity, with paraxylene output expected to reach 1.6 million tons per year and benzene production set to be 580,000 tons per year. The company currently has an output of 300,000 tons per year of benzene, 200,000 tons per year of propylene, and 700,000 tons per year of paraxylene.

In order to ensure a steady supply of naphtha for its petrochemical plants, S-Oil is also planning to increase its crude-refining capacity from the present output of 580,000 barrels per day (BBL/d) to 630,000 BBL/d. In June 2008, S-Oil announced plans to use the ParamaX technology suite developed by Axens SA (Rueil-Malmaison Cedex, France) for the production of paraxylene and benzene from naphtha at the new units.

Paraxylene, manufactured from xylene and toluene, is a basic ingredient in the production of synthetic fibers. Benzene is obtained from processing naphtha, a byproduct of refining oil crude, and is an important raw material used for producing synthetic resins and a host of other petrochemical products.

S-Oil already enjoys an international presence in the lube-oil and oil-refining segments. With the Onsan Refinery expansion venture being operational by 2011, the company is set to become a major player in the petrochemical sector of the region, where domestic production of paraxylene is about 4.14 million tons per year. Further, S-Oil's operating income ratio is also expected to register an estimated growth of 20% by early 2012.

Located close to the epicenter of global demand, S-Oil, with its operational and process expertise in the petrochemical segment, is expected to become a leading paraxylene supplier catering to the Asia-Pacific region, contributing to both the local and regional economies.

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