GS Caltex completes construction of $2 billion petrochemicals manufacturing plant

The biggest investment project ever by GS Caltex aims to diversify the company’s portfolio outside the oil refining business and into petrochemical manufacturing, therefore reducing the company’s exposure to crude price fluctuations.

GS Caltex's petrochemicals production plant in Yeosu, South Jeolla [GS CALTEX]

GS Caltex completed the construction of its 2.7-trillion-won ($2 billion) petrochemicals manufacturing plant in Yeosu, South Jeolla, the energy company said Friday.

The biggest investment project ever by GS Caltex aims to diversify the company’s portfolio outside the oil refining business and into petrochemical manufacturing, therefore reducing the company’s exposure to crude price fluctuations.

The newly-built production plant, a mixed feed cracker (MFC), will mainly produce olefins such as ethylene and polyethylene. Olefins are widely used as raw materials for plastics, rubbers and chemical products.

The MFC will annually produce 750,000 tons of ethylene, 500,000 tons of polyethylene, 410,000 tons of propylene, 240,000 tons of mixed C4 raffinate and 410,000 tons of pyrolysis gasoline, according to GS Caltex.

Unlike naphtha crackers, which uses only naphtha for petrochemicals production, MFCs can use not only naphtha but other feedstock such as liquid petroleum gas and refinery off-gas, which are crude refining byproducts. The facility can also produce hydrogen using naphtha and refinery off-gas, replacing the previously-used liquefied natural gas, and therefore cut carbon emissions by 76,000 tons a year, said GS Caltex.

“The completion of the MFC facility will serve as a major turning point for us, in terms of business diversification through the non-oil refinery business expansion and growth,” said GS Caltex CEO Hur Sae-hong.

“Amid high volatility, we now have the capability to respond to market demand with a diverse product line-up.”

Hur added that GS Caltex will “develop other high value-added products in the future,” to become an all-encompassing energy company, from oil refining to petrochemicals, renewable energy and material recycling.

GS Caltex is 50 percent owned by GS Energy, a wholly owned subsidiary of GS Holdings, and 50 percent owned by the American company Chevron.

A ceremony to celebrate the completion of the MFC was held Friday in Yeosu, attended by CEO Hur, South Jeolla Gov. Kim Yung-rok and Second Vice Minister of Trade, Industry and Energy Park Il-jun.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]