S-OIL Expands Onsan Plant

The expansion project calls for doubling its petroleum production capacity to 2.38 million ton and crude oil refining capacity to 630,000 b/d

S-OIL Corporation has officially launched a project to double petroleum production capacity of its Onsan refinery to 2.38 million tons per year in a ceremony. The expansion project also calls for boosting the plant's crude oil refining capacity from the current 580,000 barrels per day to 630,000 b/d.
The ceremony held at its Onsan factory in Ulju-gun, Ulsan, on June 11 was attended by S-OIL's CEO Ahmed A. Subaey, Ulsan Mayor Bak Maeng-woo and 300 other distinguished guests.
The Onsan refinery expansion project is a large-scale project that S-OIL is undertaking to create a new growth engine for its future, S-Oil officials said. Under the project, the refiner will invest 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 being built on a 184,500m2 site and are to be completed by June 2011.
In 2011, when the new petrochemical production facilities are completed, S-OIL's para-xylene and benzene production capacities will more than double to 1.6 million tons and 580,000 tons a year, respectively. The Company also expects its operating income ratio to increase by roughly 20 percent 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.
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 the 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 parts of Asia 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.
Once the Onsan refinery expansion project is completed in 2011, S-OIL will be the most influential para-xylene supplier in the Asia Pacific region. The company will also emerge as a petrochemical market leader, by taking advantage of its geographical proximity to the center of global demand growth.
S-OIL has continuously invested in high value-added facilities since the 1990s to establish and maintain a solid global presence in the oil refining and lube oil markets. This Onsan refinery expansion project will enable S-OIL to become the most competitive in the petrochemical market as well, thereby improving the refiner's profitability substantially. nw

S-OIL CEO Ahmed A. Subaey and other company officials and outside dignitaries attend a ceremony to launch a project to expand its Onsan plant in Ulsan on June 11.