[THE INVESTOR] Korea’s leading oil refiner GS Caltex announced on Feb. 7 it will make an investment of 2 trillion won (US$1.8 billion) in an olefin production facility, mixed feed cracker, near its plant located in Yeosu, South Jeolla Province.

Olefin is an unsaturated hydrocarbon that contains at least one carbon–carbon double bond. It includes ethylene and propylene as one of the most common petrochemical classes.

Through the plant, GS Caltex plans to produce 700,000 tons of ethylene and 500,000 tons of propylene per year with the aim of starting the plant by 2022.

The MFC facility is known to have more advantages than conventional naphtha cracking center where naphtha is injected as a base material. In the mixed feed cracker, diverse base materials including liquefied petroleum gas and by-product gas can be injected.

The MFC’s main product ethylene is transformed into polyethylene in the process of chemical treatment. The polyethylene will then be used for plastic products such as vinyl, container and disposable products after going through processing.

The global polyethylene market is around 100 million tons per year, according to IHS data. The plastic has the biggest portion of the total olefin market of 260 million tons with an annual growth rate of 4.2 percent.

“Through the investment decision, we will diversify current business portfolios of oil refining and aromatic and reduce profit variability,” said a GS Caltex spokesperson.

This is in line with the New Year’s address from Chairman Huh Jin-soo’s that the company will continue to expand portfolios in response to the changing business environment.

Through the new petrochemical products, GS Caltex is expecting to see additional operating profits of more than 400 billion won.

Apart from boosting profits, the new facility of GS Caltex is expected to create jobs and to benefit the regional economy. The new construction is expected to create 2 million jobs and economic benefits worth 1 trillion won in the region.

The oil refining firm invested in more than 5 trillion won in advancing facilities from 2006 to 2013 and injected 12 trillion won in investing in facilities from 2000 to 2017. The continued investment efforts increased the portion of export from 23 percent in proportion to total sales in 2000 to more than 71 percent last year, the company said. 

By Shin Ji-hye/The Korea Herald (shinjh@heraldcorp.com)