In South Korea, petrochemical companies that have conventionally relied on oil as an energy source are now increasingly moving away from this business structure to explore non-oil based chemicals businesses. As part of this alteration to their business approach, petrochemical companies are investing in additional facilities that are not entirely dependent on oil. This group now includes shale gas, natural gas, liquefied petroleum gas, and condensate obtained through naphtha-based plants. While a departure from traditional oil-based chemicals is a more sustainable business model, the high costs may prove to be a deterrent. Despite that, it is increasingly becoming evident that more and more businesses are opting for this novel business model.
According to a recent report in the country’s leading business portal, Business Korea, market players are expecting their facilities based on unconventional energy sources to reach completion in the immediate future. Hyosung, for one, was expected to extend its Ulsan-based polypropylene plant by the third quarter of the year so as to enhance its polypropylene production capacity to about 500,000 tons per year.
On similar lines, Lotte Chemicals will be venturing into Uzbekistan by investing in chemical plants that use gas as an energy source. Thus far, the company has pumped in about US$ 338 million in the project, which will also see the Uzbek government participating. This chemical plant is expected to reach completion by the end of 2015. Other companies investing in similar ventures include: Samsung Total, SK Incheon Petrochem, LG Chem and SK Gas.
With this strategy that entails the diversification of raw materials, petrochemical companies in South Korea are hoping to trounce other competitive disadvantages when compared with other oil-producing companies in the Middle East.