[Report] Shahin Project Construction on Track... S-Oil's Leap to 'Energy Chemical Company'

Largest Ever Domestic Petrochemical Project
EPC Process Progress Reaches 40%

World's First Commercialization of TC2C in 2026
"Production of Petrochemical Products from Crude Oil"

"About 4,000 workers are currently employed at the construction site, and as work intensifies around the third quarter of next year, approximately 17,000 workers are expected to be deployed. Starting next month, a total of 105 modules will be sequentially delivered to the site, marking the construction's full-scale progress."

On the 22nd, at the S-Oil Shahin Project 'Package 1' construction site located in the Onsan National Industrial Complex in Ulsan, although the autumn rain prevented usual work activities, excavators were busy moving in some process areas, and pipe connection and erection work were in full swing. Lee Hyun-young, Control Director of the Shahin Business Unit at Hyundai Engineering & Construction, who was met on site, confidently stated that construction work is progressing smoothly.

The Package 1 site covers an area of 480,000㎡, equivalent to 67 soccer fields (7,140㎡ each), and will house 10 cracking heaters and the TC2C (Thermal Crude to Chemical) facility, which can be considered the core of the Shahin Project.

Onsan National Industrial Complex in Ulsan City, S-Oil Shahin Project construction site. The cracking heater (facility on the right in the photo), a key equipment for ethylene production, has been introduced, and full-scale equipment construction work is underway. (Provided by S-Oil)

The design, procurement, and construction (EPC) progress rate of the Shahin Project, which S-Oil is promoting to become an 'eco-friendly energy chemical company,' reached 40% on this day. This is the largest project in the history of domestic petrochemicals, with a total investment of 9.258 trillion KRW, and it is proceeding smoothly.

As of this day, 8 out of the 10 ultra-large cracking heaters in Package 1 have been installed. Cracking heaters are key devices of steam crackers that thermally decompose naphtha or LPG (liquefied petroleum gas) to produce basic petrochemical feedstock products such as ethylene, propylene, butadiene, and benzene.

These are ultra-large heavy equipment measuring approximately 10m in width, 40m in length, and weighing 3,200 tons. When auxiliary equipment is connected, the height reaches an impressive 67m upon completion. They are manufactured in module form at a plant company in Yeongam, Jeollanam-do, transported by sea to Onsan Port, and then moved overland for installation.

Once all steam crackers are completed, S-Oil will have an annual ethylene production capacity of 1.8 million tons, the largest in the world for a single facility. The company plans to secure competitive energy efficiency by introducing self-power generation through high-efficiency gas turbine generators and a high-temperature waste heat recovery system.

Package 1 will also include the TC2C facility, which applies new technology to convert crude oil into petrochemical feedstocks such as naphtha and LPG. TC2C, which incorporates proprietary technology from S-Oil’s parent company Saudi Aramco, is expected to be the world's first commercial operation through the Shahin Project.

This process allows the production of petrochemical feedstocks without going through the refining process that produces gasoline or diesel, enabling the production of products with lower carbon intensity compared to the conventional petrochemical industry.

About 4 km away in a straight line from Package 1, on a 400,000㎡ site, Package 2 will house polymer facilities that produce high value-added petrochemical products used as raw materials for plastics and synthetic resins. Polyethylene and polypropylene, raw materials for plastics, will be produced and supplied to customers or exported.

[Image source=Yonhap News]

The Shahin Project, targeted for completion in June 2026, is being constructed by an EPC consortium composed of Hyundai Engineering & Construction, Lotte Engineering & Construction, and DL E&C. This reflects S-Oil’s intention to find a breakthrough in petrochemical products applying new technologies amid the crisis of declining demand for refined products due to electrification. S-Oil plans to increase the share of its chemical business (based on product output) from the current 12% to 25% by 2030.

The economic ripple effects of the Shahin Project are exemplified by the supply contract cases with Ulsan-based companies SDG and Olefin Monomer. SDG will supply more than 600,000 tons of products produced annually from the Shahin Project to regional petrochemical companies through infrastructure and pipeline networks it has established. SDG also announced plans to invest 30 billion KRW to expand the pipeline network. Additionally, as the floating population in the Ulsan area increases, retail, restaurants, and lodging businesses are also becoming more vibrant.

S-Oil is preparing financing for the Shahin Project with a stable financial structure. Of the total investment amount of 9.258 trillion KRW, about 1.65 trillion KRW had been spent by the end of last year. Approximately 2.65 trillion KRW of the total investment will be raised externally.

An S-Oil official explained, "We have completed agreements for bank loans and major shareholder loans, and fixed-rate corporate bonds will be issued sequentially in 2025 and 2026. We also hold additional credit limits such as extended payment terms for Saudi crude oil and trade finance, enabling us to adequately respond to various market scenarios."

S-Oil Shahin Project Process Flowchart (Provided by S-Oil)