[Report] S-Oil Shahin Project Surpasses 85% Completion... Final Countdown to Completion

9 Trillion Won Invested in Korea's Largest Petrochemical Project
World's First Direct Production of Petrochemicals from Crude Oil
Confident in Price Competitiveness Despite Low-Cost Pressure from China

On October 21, at Package 1 of the S-Oil "Shahin Project" site in Onsan National Industrial Complex, Ulju-gun, Ulsan, trucks loaded with materials moved continuously under a drizzling sky. The amount of steel frames used in the construction alone totals 98,000 tons-enough to build 14 Eiffel Towers. More than 11,000 workers are simultaneously carrying out civil engineering, piping, and electrical work at this site, making it the largest construction site in the domestic petrochemical industry. Just a year ago, the construction progress rate was stuck in the 40% range, but it has now surpassed 85%. Only eight months remain out of the total 42-month construction schedule. The goal is to complete mechanical construction by June next year, followed by trial operations and the start of commercial operation in the second half of the year. Once fully operational, the plant will supply 1.8 million tons of ethylene and 770,000 tons of propylene annually to the market.

Hyunyoung Lee, site manager at Hyundai Engineering & Construction, is explaining the construction progress at the observation deck of Package 1 of the Shahin Project ethylene facility located in Onsan National Industrial Complex, Ulju-gun, Ulsan. Ulsan - Photo by O Ji-eun

The first thing that caught the eye at the Package 1 site that day was the 118-meter-tall, 2,300-ton propylene separation tower. Right next to it, four out of ten "cracking heaters," which are core devices of the steam cracker (thermal decomposition furnace), have been completed. The remaining six are scheduled to be erected within this year. Hyunyoung Lee, site manager at Hyundai Engineering & Construction, said, "The overall outline of the plant is now fully visible."

The Shahin Project is a mega-scale initiative, the largest in the history of the domestic petrochemical industry, with an investment of 9 trillion won. It is the world's first to introduce the TC2C (Thermal Crude to Chemicals) process, which produces petrochemical products directly from crude oil. This technology converts heavy oil (residual oil) left over from the refining process into petrochemical feedstocks such as naphtha without separate refining, achieving yields three to four times higher than conventional processes. The naphtha produced from TC2C is sent directly to the adjacent steam cracker, where it is heated, cooled, and compressed at 850 degrees Celsius, separating it into basic feedstocks such as ethylene, propylene, benzene, and butadiene.

The industry is watching closely to see how the Shahin Project will impact the balance of the domestic market amid restructuring pressures caused by oversupply from China and a global economic slowdown. The domestic petrochemical industry is currently under pressure to restructure due to oversupply from China and the global economic downturn. The Ministry of Trade, Industry and Energy and major companies are discussing plans to reduce domestic naphtha cracking capacity (NCC) by 2.7 million to 3.7 million tons, which is equivalent to 18-25% of total capacity. Once the Shahin Project begins full-scale operations, it will add about 12% to the country's annual ethylene production. S-Oil has turned this crisis into an "investment opportunity." An industry official said, "When the Shahin Project is completed, it will secure price competitiveness even compared to large-scale, low-cost producers like China."

Construction site of the S-Oil Shahin Project underway at Onsan National Industrial Complex, Ulju-gun, Ulsan. Behind the white dome storage tank on the left side of the photo, the TC2C facility, which refines crude oil to produce petrochemical raw materials, is located. To the right of it, there are one 118-meter-high propylene separation tower and four steam crackers. S-Oil

In 2018, S-Oil invested 5 trillion won in the first phase of its Residue Upgrading Complex (RUC) and Olefin Downstream Complex (ODC) projects, expanding its business structure from refining to petrochemicals. The current Shahin Project is a follow-up, taking the integration of refining and chemical operations to the next level by completely breaking down the boundaries between the two sectors.

Once completed, the basic feedstocks such as ethylene and propylene produced at the plant will be supplied directly via pipelines to companies within Ulsan and the Onsan National Industrial Complex. This will allow for stable domestic sourcing of raw materials that had previously relied on imports, resulting in reduced logistics costs and improved trade balance. At the same time, S-Oil has begun export marketing targeting Asian markets such as Japan. By leveraging the global network of its largest shareholder, Saudi Aramco, S-Oil plans to develop Korea into a key hub in the Northeast Asian petrochemical supply chain. An S-Oil representative stated, "We will successfully complete the Shahin Project, enhance the fundamental competitiveness of Korea's petrochemical industry, and work with the government and related industries to make this a turning point for the industry's new leap forward."