S-OIL breaks ground on USD7bn South Korean petrochemical project

S-OIL held the groundbreaking ceremony at S-OIL Ulsan Refinery in the presence of President Yoon Suk Yeol for the 9.258 trillion Won Shaheen Project, Korea’s biggest ever petrochemical project, said Hydrocarbonprocessing.

The ceremony was attended by some 300 guests including Chang-Yang Lee, Minister of MOTIE (Ministry of Trade, Industry and Energy), Doo-kyum Kim, mayor of Ulsan City, Amin H. Nasser, President & CEO of Aramco, members from the central and local government, and construction companies. The ceremony celebrated the start of a new chapter in the Company’s history.

Shaheen reflects S-OIL’s ambitious plan to solidify its position as a clean energy and petrochemicals company that supports broader carbon neutrality ambitions. The project is located at the Onsan Industrial Complex of Ulsan City, with completion expected in 2026.

Major units include the world’s largest steam cracker (production capacity: 1,800 KTA of ethylene), a TC2C facility which converts crude directly into petrochemical feedstock (LPG, Naphtha), a polymer facility that produces high value petrochemical feedstock for plastics and other synthetic resins, and other facilities including storage tanks.

After completion of the project, S-OIL’s petrochemical production will more than double to 25% from the current 12% of total production, playing a pivotal role in diversifying its fuel-weighted business. S-OIL to diversify its business portfolio from “crude to chemicals” for innovative growth.

Shaheen represents the largest-ever investment into South Korea by Aramco, one of the world’s preeminent integrated energy and chemicals companies. Total investment including the 4.8 trillion Won first phase completed in 2018, amounts to 14 trillion Won.

“We are embarking on a great journey in the belief that this is the right time to invest in the future,” said Hussain A. Al Qahtani, the CEO of S-OIL. “Support from all of our stakeholders and our outstanding employees will no doubt deliver another major investment. Shaheen will not only expand the Company’s business portfolio into petrochemicals but also advance our efforts to drive innovative growth across the entire value chain of our business.”

The project is not only benefitting the economy of Ulsan, but also the country’s wider manufacturing industry. It will generate as many as 17,000 jobs during peak construction. After start-up it will support more than 400 jobs and provide 3 trillion Won in added value to the economy.

Shaheen will significantly improve the stable supply of petrochemical feedstock and more than double ethylene production capacity in Ulsan. It will also supply monomer products through a pipeline to adjacent downstream olefin-processing businesses.

We remind, Saudi Aramco’s majority owned S-Oil Corp. has let a contract to Lummus Technology LLC to deliver the first commercial deployment of a new crude-to-chemicals process technology for a massive petrochemical expansion at the operator’s 669,000-b/d integrated refining complex in Ulsan, South Korea.

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Energy group Eni has signed a two-year contract with Italy's Spinelli to power the trucks of the logistic group with a diesel fuel produced from 100% renewable raw materials, said Hydrocarbonprocessing.

The biofuel is produced from waste raw materials, vegetable residue and oils processed in Eni's bio refineries in the Sicilian town of Gela and in Venice, the group said on Wednesday.

The contract is part of Eni's strategy to develop sustainable transport services through its new dedicated company dubbed Eni Sustainable Mobility.

The setting up of Eni Sustainable Mobility in January follows the creation of Plenitude, the group's unit dedicated to renewable energies, in 2021.

We remind, Eni has signed a two-year contract with logistics firm the Spinelli Group to provide diesel produced by 100% renewable raw materials to help power its fleet. The hydrotreated vegetable oil (HVO) is available at 57 service stations, will be available at 150 sales points in Italy by the end of the month and will be used by 150 vehicles in the Spinelli Group fleet. Eni Sustainable Mobility has been operating since January, combining biomethane and sale of mobility-related products across more than 5,000 service stations in Italy and abroad.

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India's fuel demand hit its highest level in at least 24 years in February, data showed on Thursday, with industrial activity in Asia's third biggest economy boosted by cheap Russian oil, said Hydrocarbonprocessing.

Consumption of fuel, a proxy for oil demand, rose by more than 5% to 4.82 million barrels per day (18.5 MMt) in February, its 15th consecutive year-on-year rise, data showed. Demand was the highest recorded in data compiled by the Indian Oil Ministry's Petroleum Planning and Analysis Cell (PPAC) going back to 1998.

The strength highlights a combination of profitable refining from record Russian crude imports in February, total utilization for primary distillation across India and still-robust domestic consumption, said Viktor Katona, lead crude analyst at Kpler.

Katona forecasts demand in March at 5.17 MMbpd and then the seasonal monsoon-driven slowdown will lead to it to drop to 5 MMbpd in April-May. Sales of gasoline, or petrol, rose 8.9% year-on-year to 2.8 million tonnes in February, while diesel consumption climbed 7.5% to 6.98 million tonnes.

Sales of jet fuel jumped more than 43% to 0.62 MMt, the data showed. "For 2023, the strongest demand growth rate is projected to be in jet fuel, followed by gasoline and then diesel/gas oil," said Alan Gelder, VP Refining, Chemicals and Oil Markets at Wood Mackenzie.

While fuel sales data showed total volumes of both gasoline (motor spirit) and diesel (HSD) fell in February relative to January, they grew strongly on a daily consumption basis as February is a short month, Gelder noted.

Cooking gas, or liquefied petroleum gas (LPG), sales slipped by 0.1% to 2.39 MMt. Sales of bitumen, which is used for building roads, jumped 21.5% month-on-month, while fuel oil use declined slightly more than 5% in February, compared with January.

We remind, BASF has commenced production of its first bio-based polyol, Sovermol®, in Mangalore, India, said the company. This is the company’s first bio-based polyol production facility in Asia Pacific, serving the region’s fast-growing demand of eco-friendly products for new energy vehicles (NEV), windmills, flooring and protective industrial coatings, it said.

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Russia is ramping up its diesel supplies to Saudi Arabia using ship-to-ship (STS) loadings in addition to direct supplies, market sources said and Refinitiv data showed, said Hydrocarbonprocessing.

Exporters of Russian diesel are trying STS to save on new longer and therefore costly routes after a full EU embargo on Russian oil products was imposed on Feb. 5. They are switching Russian diesel exports to Africa and Asia instead of adjacent European countries.

In February, Russia began direct diesel exports to Saudi Arabia, sending about 190,000 tons to the ports of Ras Tanura and Jeddah. STS loadings help to shorten the routes and could save time by going through the Suez Canal, one trader said.

According to Refinitiv shipping data, about 99,000 tons of diesel from two cargoes loaded in February in the Baltic port of Primorsk - Agios Nikolaos and Mandala - were transferred ship-to-ship near Kalamata port to the tanker Dimitri, which is heading to the port of Ras Tanura in Saudi Arabia.

Another 30,000 tons of gasoil from the tanker Butterfly loaded in the Russian Black Sea port Tuapse were co-loaded on STS near Kalamata port on the tanker Aether, which is already discharged in the port Jizan.

We remind, Russian ultra-low-sulphur diesel (ULSD) diesel shipments to Brazil hit a record high in February, while Moscow is exploring new markets following the European Union ban, according to traders and Refinitiv data. A full EU embargo on Russian oil products went into effect on Feb. 5, and Africa, Asia and ship-to ship (STS) loadings took market share of Russian diesel buyers instead of Europe. According to Refinitiv, at least four cargoes carrying 140,000 tonnes of diesel were loaded in the Russian Baltic port of Primorsk in February and were now heading to Brazil.
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A Brazilian senator called on Thursday for a Congressional investigation into the sale of a Petrobras refinery to United Arab Emirates' Mubadala Capital, citing a suspected link to jewelry given to former President Jair Bolsonaro, said Hydrocarbonprocessing.

The RLAM refinery in the state of Bahia was sold in 2021 to Mubadala's Acelen unit along with its logistical assets for USD1.8 B.

Senator Omar Aziz, who chairs the Senate committee on governance and consumer protection, said on Twitter that "any violation of federal interests, any relation to the attempt to smuggle in the jewels, or any act that created advantages in this sale" would be taken to courts to punish those involved.

The senator said his committee would first ask Petrobras, formally known as Petroleo Brasileiro S.A., to provide documents on how the refinery deal was priced.

On Wednesday, Brazil's oil workers union FUP said it had asked public prosecutors to investigate any link between the refinery sale to Bolsonaro's alleged attempt to bring a USD3.2-MM gift of jewelry into the country in 2021 without declaring it. Customs officials seized the jewels found in the backpack of a government aide.

The gift by Saudi Arabia's king to Bolsonaro and his wife Michelle Bolsonaro was not from the United Arab Emirates, but the union pointed out that two countries are geographically close and that the former president had said in a recent interview that the gift was settled in the Emirates.

FUP added that the Institute for Strategic Studies in Petroleum, Natural Gas and Biofuels (Ineep) estimated the refinery to be worth USD3 B to USD4 B, about double the price it was sold for.

We remind, Petrobras said on Tuesday it will reduce gasoline and diesel prices at its refineries from Wednesday, a move that will likely offset the resumption of federal taxes levied on fuels. Shares in the company dropped sharply after the news, trading down more than 3% by midday and making Petrobras one of the biggest fallers on the local benchmark stock index Bovespa , which slipped 0.5%. The price cut comes as the government announced on Monday it was set to resume the collection of taxes on fuels, ending a waiver set by former President Jair Bolsonaro last year - a measure that will boost government revenues but is seen as upsetting the middle class.

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