S Korea’s S-Oil targets Shaheen project mechanical completion in H1 ’26

SINGAPORE (ICIS)–South Korean refiner S-Oil expects mechanical completion of its petrochemical complex in Ulsan in the first half of 2026, and the company intends to issue Korea won (W) 870bn ($645m) worth of corporate bonds as part of external project funding.

Construction of the $7bn project called Shaheen – Arabic word for falcon – at the Onsan Industrial Complex of Ulsan City started in March this year.

“The company is consolidating all of its capabilities to carry out Shaheen Project, which will enhance the enterprise value in response to the energy transition,” S-Oil said in its third-quarter results presentation released on 30 October.

As of September, site preparation was at 31.4%, while engineering, procurement and construction (EPC) was at 13.9%, S-Oil said on Monday, and these were “going smoothly according to the plan”, it said.

The Shaheen project will have a 1.8m tonne/year mixed-feed cracking facility; a 880,000 tonne/year linear low density polyethylene (LLDPE) unit; and a 440,000 tonne/year high density polyethylene (HDPE) plant.

The site will also have a thermal crude-to-chemical (TC2C) facility which will convert crude directly into petrochemical feedstocks such as liquefied petroleum gas (LPG) and naphtha, and the cracker is expected to recycle waste heat for power generation in the refinery.

Source: S-Oil, 30 October 2023

The T2C2 technology from S-Oil’s parent firm Saudi Aramco is expected to “maximize chemical yield”, with capital expenditure over operating expenditure saving of 30-40% versus conventional process, the Korean refiner said.

Saudi Aramco, the world’s biggest crude exporter. owns more than 63% of S-Oil.

The bulk of Shaheen project cost or 71% will be financed by internal resources, while the balance will be sourced via a combination of loans and corporate bonds.

“Through securing diversified financing options, we can optimize execution timing and minimize costs of the financing in response to future uncertainties of financial markets,” S-Oil said.

The planned corporate bonds to be issued at a later stage in project construction represent about a third of external funding and less than 10% of the total project cost of W9.28tr ($7bn).

About two-thirds of external financing will be secured via loans – W780bn from banks and W1tr from shareholder.

Terms and conditions with a “major shareholder” for a stand-by credit line of W700bn has been “agreed on major terms and conditions”.

“The company has finalized major terms for shareholder loan and agreement for bank loans at competitively lower rates,” S-Oil said.

S-Oil swung into a net profit of W545.4bn in the third quarter of 2023, reversing the W9.6bn loss incurred in the previous corresponding period, on the back of strong refining margins.

in billion won (W)	Q3 2023	Q3 2022	Yr-on-yr % change	Jan-Sept 2023	Jan-Sept 2022	Yr-on-yr % change
Revenue	8,999.6	11,122.6	-19.1	25,896.8	31,852.1	-18.7
Operating income	858.9	511.7	67.9	1,411.0	3,565.6	-60.4
Net income	545.4	-9.6	–	788.3	1,875.5	-58.0

Focus article by Pearl Bantillo

($1 = W1,348)

Thumbnail image source S-Oil website