South Korea's SKGC to explore feedstock shift to ethane

: LPG, Oil products
25/11/20

South Korea's SK Geocentric (SKGC) will explore using ethane as a feedstock at its naphtha cracking unit (NCC) in Ulsan, in a move away from naphtha feedstock, to enhance the cracker's competitiveness.

SKGC signed a business agreement with SK Gas to "promote the ethane business", SK Innovation — the parent company of SKGC — said in a statement on 20 November.

The two companies aim to establish a supply chain system from ethane imports to consumption, "thereby securing both price competitiveness and supply stability", according to the statement.

SKGC's NCC at Ulsan can produce 680,000 t/yr of ethylene and 340,000t/yr of propylene, largely from naphtha.

But SKGC is looking to diversity its "raw material structure", it said. Ethane is more cost competitive than naphtha, with lower price volatility and has a higher ethylene production efficiency, it added.

Ethane is already widely used by major petrochemical companies in China, India and Europe, fuelled by an expansion of shale gas production in North America, the company said.

US — the world's main exporter of ethane — is expected to continue growing its ethane exports by about 33pc in 2026, compared with 2024, according to the US Energy Information Administration (EIA).

Even after accounting for transport costs and terminal operating costs, ethane is still cost competitive compared with naphtha, said SKGC.

Meanwhile, SK Gas will develop a terminal that can store and unload ethane, and aims to use this to supply the Ulsan complex.

The two companies will specify ethane supply timing and volumes under the agreement, it said. But the timeline of this shift was not outlined.

SK imports naphtha into the Ulsan and Incheon ports, taking in about 100,000-200,000 t/month of naphtha at the Ulsan port, according to data from trade analytics platform Kpler and market participants.

Aside from SKGC's ethane project, South Korea's LG Chem, HD Hyundai Oilbank and Hanwha TotalEnergies Petrochemical had previously signed an agreement to look into joint ethane purchasing late last year. The three petrochemical companies had signed a memorandum of understanding to build ethane terminals and other infrastructure in Daesan, where their crackers are located, by 2028.

By Cara Wong

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25/12/03

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