Lotte, SK, Air Liquide Establish Hydrogen Joint Venture: "Business to Start in Ulsan in Q3"

Shareholding Lotte 45: SK 45: Air Liquide 10
Construction of 500,000 MWh/year Fuel Cell Power Plant
Expansion of Hydrogen Charging Stations

Business to Start from Q3 Upon Fair Trade Commission Approval

Key stakeholders attending the contract signing ceremony for the hydrogen joint venture between Lotte Chemical, SK Gas, and Air Liquide Korea. From the left, Jin-gu Hwang, CEO of Lotte Chemical; Byung-seok Yoon, CEO of SK Gas; and Nicolas Pouliquen, CEO of Air Liquide Korea. (Photo by Lotte Chemical)

[Asia Economy Reporter Moon Chaeseok] Lotte Chemical, SK Gas, and Air Liquide Korea are establishing a joint venture for by-product hydrogen power generation and hydrogen transportation businesses. If the Fair Trade Commission's approval proceeds smoothly, the business is planned to start from the third quarter. Lotte Chemical is the largest domestic producer of by-product hydrogen, and Air Liquide is a global industrial gas company, so the three companies expect significant synergy.

Lotte Chemical announced that the three companies held a joint venture establishment ceremony at 10 a.m. on the 2nd at Lotte World Tower in Jamsil. Key executives, including Hwang Jingu, head of Lotte Chemical's Basic Materials Business, Yoon Byungseok, CEO of SK Gas, and Nicolas Pouliquen, CEO of Air Liquide Korea, attended the event.

In May last year, Lotte Chemical signed hydrogen business memorandums of understanding (MOUs) with SK Gas and Air Liquide, respectively. Since then, they decided to establish a joint venture to combine each company's capabilities and accelerate the business's early settlement. The shareholding structure is 45% each for Lotte Chemical and SK Gas, and 10% for Air Liquide. Lotte Chemical and SK Gas will jointly manage the company. The joint venture's name has not been decided yet. After filing and obtaining approval for the business combination from the Fair Trade Commission, the company plans to establish the corporation within the third quarter and proceed with the business.

The joint venture's first project will be the construction of a hydrogen fuel cell power plant in Ulsan. This is because Lotte Chemical and SK Gas can secure by-product hydrogen, and the hydrogen infrastructure is well established there. The joint venture's hydrogen fuel cell power plant is expected to have an annual power generation capacity of 500,000 MWh. This is enough electricity for 120,000 households with four members to use for one year. Subsequently, they plan to build hydrogen charging stations at major locations nationwide and explore cooperation opportunities in blue and green hydrogen businesses.

The three companies stated that they will actively utilize their respective capabilities to operate the joint venture successfully. Lotte Chemical, as the largest domestic producer of by-product hydrogen, will provide raw material supply as well as business sites within the Ulsan plant. Through group affiliates, they will secure demand sources and provide a highly stable business environment. SK Gas will secure and supply by-product hydrogen through its affiliates in Ulsan. Leveraging its existing power generation business capabilities and its liquefied petroleum gas (LPG) charging station network and operational know-how, SK Gas plans to drive the joint venture's long-term growth. Air Liquide Korea will provide expertise and related technologies not only for hydrogen charging stations but also for hydrogen supply chains and distribution.

CEO Hwang Jingu said, "It is highly meaningful to concentrate each company's core competencies to establish the foundation of an eco-friendly hydrogen market for the early ecosystem formation of the hydrogen industry." He added, "We will focus Lotte Chemical's know-how and capabilities to make this a meaningful step toward the upcoming activation of the hydrogen economy." CEO Yoon Byungseok said, "We hope that the establishment of this joint venture will serve as an important catalyst for activating South Korea's hydrogen economy and contribute to the transition to a domestic hydrogen society in the future." He also said, "SK Gas will mobilize its prepared hydrogen business capabilities to help Korea transition to a hydrogen society." CEO Pouliquen said, "We are very pleased to cooperate with Lotte Chemical and SK Gas, and we expect this joint partnership to greatly contribute to the sustainable development of Korea's hydrogen economy." He added, "This aligns with Air Liquide Group's climate strategy to contribute to sustainable future development.”