Saudi Aramco to build $7bn Shaheen petrochemical project in South Korea

Nurluqman Suratman


SINGAPORE (ICIS)–Saudi Aramco, through its subsidiary S-Oil, will build a won (W) 9.3tr ($7bn) petrochemical project in Ulsan, South Korea which would include a 1.8m tonne/year mixed-feed cracking facility.

The project called Shaheen will be located at S-Oil’s existing site in Ulsan and will produce around 3.2m tonnes/year of petrochemical products by 2026, Korean refiner S-Oil said in a regulatory filing.

The project marks Saudi Aramco’s biggest ever investment in South Korea and follows an earlier $4bn investment into the first phase of the petrochemical expansion completed in 2018.

“The $7bn Shaheen project aims to convert crude oil into petrochemical feedstock and would represent the first commercialisation of Aramco and Lummus Technology’s TC2C [thermal crude to chemicals] technology, which increases chemical yield and reduces operating costs,” Saudi Aramco said in a separate statement,

The steam cracker is expected to process by-products from crude processing, including naphtha and off-gas, the Saudi energy giant said.

Saudi Aramco – the world’s biggest crude exporter – owns more than 63% of S-Oil through its subsidiary Aramco Overseas Co.

“By further integrating refining and chemical processes through the first commercialization of Aramco’s thermal crude to chemicals technology, we aim to create a more efficient, competitive and sustainable platform for growth, while paving the way for further downstream expansion,” Saudi Aramco president and CEO Amin Nasser said.

The Shaheen project is expected to produce 580,000 tonnes/ year of ethylene, 770,000 tonnes/year of propylene, 200,000 tonnes/year of butadiene (BD) and 280,000 tonnes/year of benzene, S-Oil said in a regulatory filing.

An 880,000 tonnes/year linear low density polyethylene (LLDPE) unit and a 440,000 tonnes/year high density polyethylene (HDPE) plant will also be built as part of the project.

“Improvement of profitability is expected by upgrading low value-added raw materials, such as naphtha, byproduct gas and residual oil to high value-added chemical products,” S-Oil said.

S-Oil had stated in April 2021 that is targeting to double the share of chemicals to its overall production via the Shaheen project to 25%, from 12% currently.

The announcement of the Shaheen project coincides with the planned visit of Saudi Crown Prince and concurrent Prime Minister Mohammed bin Salman to South Korea this week.

Apart from the Shaheen project, S-Oil is planning to enter the hydrogen market as part of its long-term plans.

In January this year, S-Oil signed four memorandum of understanding (MoU) agreements with Saudi Aramco to pursue carbon neutral and environment-friendly energy businesses covering clean hydrogen and thermal crude-to-chemical, among others.

S-Oil is studying the viability of producing and distributing liquefied hydrogen utilising green hydrogen and green ammonia through a partnership with Saudi Aramco.

The refiner is also considering opening a hydrogen charging station in Seoul and participates in a Special Purpose Cooperation called Kohygen (Korea Hydrogen Energy Network), which was formed to build hydrogen charging infrastructure for busses and trucks.

S-Oil posted a third-quarter net loss of W9.6bn, a sharp turnaround from the W334.5bn net profit recorded in the same period last year as refining margins slumped.

Petrochemicals operating income in July-September 2022 fell by 25% year on year to W56.1bn.

Focus article by Nurluqman Suratman

($1 = W1,342)

Thumbnail photo: A S-Oil production facility (Source:

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