S-Oil’transformation of a chemical company’ worked-Maeil Economy

S-OIL (CEO Hussein Al-Qatani)’s long-term growth strategy, “from petroleum to chemistry,” shined amid the crisis caused by Corona 19. S-OIL was the only one among four domestic oil refineries to record a surplus in the fourth quarter with a strategy to maximize the production of lucrative petrochemical products despite a decline in global demand for petroleum products and a decline in refining margins.

On the 14th, S-Oil analyzed that it was the effect of refinery and petrochemical facilities secured through large-scale investments for the secret to successful turnaround compared to the previous quarter with sales of 4.28 trillion won and operating profit of 91.3 billion won in the fourth quarter of last year. S-OIL recorded a loss of 87.9 billion won in the oil refining business, but succeeded in turning to the black based on operating profits from the petrochemical (72.7 billion won) and lube base oil (111.1 billion won) businesses. S-Oil explained that the bold investment and operation strategy in petrochemical facilities also had a great effect. S-OIL has been fully operating related facilities in the fourth quarter after undergoing regular maintenance work in the third quarter of last year.

In 2018, S-OIL operated a refinery complex petrochemical facility, which invested a total of 5 trillion won, and a new advanced facility, the Residue Oil Upgrade Facility (RUC) and the Olefin Downstream Facility (ODC). RUC produces gasoline, high-grade gasoline additives (MTBE), and propylene and ethylene, which are basic raw materials for petrochemicals, using heavy residual oil, which is cheaper than crude oil, and puts this propylene into ODC to produce polypropylene (PP) and propylene oxide. (PO) is created and supplied to domestic and overseas petrochemical companies.

Based on the two facilities, S-OIL has fully operated production facilities such as PP and PO, its flagship products. This is because olefin items are expected to show strong strength due to policies to boost consumption in each country. An official from S-Oil said, “We were able to promote profitable products such as PO and lubricant base oil, which are raw materials for petrochemicals.” Overseas networks, which S-OIL has been elaborating on for over 40 years, also helped improve performance. S-OIL expects to see more earnings improvement this year. This is because the demand for petroleum products rises due to the spread of the vaccine against Corona 19, and refining margins are expected to recover, and demand for chemical products is expected to increase.

The second phase petrochemical project, the Shahin Project, is also scheduled to resume. Shahin means’hawk’ in Arabic. The core is an olefin downstream facility that produces high-value-added petrochemical products such as steam crackers that produce 1.5 million tons of ethylene and other petrochemical raw materials per year using naphtha and by-product gas as raw materials. S-OIL plans to resume the basic design of the project in the second half of this year and make a final investment decision (FID) in the second half of next year.

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