Petrochem firms to fuel plants with self-supplied power

South Korea’s petrochemical companies will build power plants for the first time in their history to meet their rising energy needs on a stable basis, as the global energy crunch is showing no signs of easing.

The global shift toward eco-friendly products requires them to expand facilities, increasing their energy demand. Also, their electricity-generating plants will use eco-friendly fuels such as liquefied natural gas (LNG) and biomass energy to reduce carbon emissions.

The move will reduce their dependence on power utility KEPCO Co., which has a monopoly on power transmission and distribution, while cutting their energy costs.

SK Chemicals Co., a producer of chemical materials and healthcare products, is preparing to build its first LNG plant as it is expanding its production of eco-friendly products.

It will set a date for the groundbreaking ceremony at a board meeting next month, according to industry sources on Wednesday.

The LNG plant will have a 300-megawatt capacity, enough to power 80,000 households per year. It will be built on land measuring 37,965 square meters, adjacent to its Ulsan plant, 310 km southeast of Seoul.

The electricity generated from the plant will be supplied to SK Chemical’s production line of copolyester, a plastic material without environmental hormones, in the same region.

Its first-ever power plant to be built will also fuel SK Gas Ltd.’s propane de-hydrogenation (PDH) plant. SK Gas is a liquefied petroleum gas (LPG) supplier. In the PDH process, propane is dehydrogenated to propylene, which is used as fuel gas.

L'Oréal S.A., the world’s largest cosmetics company and Johnson & Johnson, a US consumer health products company, are among SK Chemical’s main customers.

“Stable power supply becomes more important than ever as we're accelerating efforts to achieve carbon neutrality,” said an SK Chemical official.

SK Ecoplant Co., formerly SK Engineering & Construction Co., will handle the engineering, procurement and construction of the electricity plant, for which the petrochemical arm plans to spend 420 billion won ($323 million).

LG CHEM, HANWHA IMPACT

LG Chem Ltd. plans to team up with GS EPS Co. to build a biomass power plant in Yeosu, 320 km south of Seoul, which will be its first power plant. Electricity and industrial steam produced from the power plant will be used at LG’s naphtha cracking center.

Hanwha Impact Co., a petrochemical arm of Hanwha Group, is carrying out a feasibility study of using hydrogen as a gas turbine fuel. If it proves feasible by the first half of next year, Hanwha will build such a plant and supply the power to its petrochemical plant in Daesan, 85 km southwest of Seoul.



These companies are not alone in looking to produce electricity to fuel their plants.

Energy supply disruptions aggravated by the Russia-Ukraine war have highlighted the need to secure a stable energy supply, key in cracking naphtha, a petrochemical feedstock, all year round.

Back in 2021, a 16-minute blackout at a petrochemical plant in Ulsan caused tens of millions of dollars in lost production.

Hyundai Motor Co., South Korea’s No. 1 automaker, plans to build a large-scale LNG-fueled power plant to boost its energy self-sufficiency to more than 70%. It aims to complete the construction at the site of its main Ulsan factory by 2025 to reach carbon neutrality by 2045.

SK Hynix Inc., the world’s second-largest memory chipmaker, is in the final stage of building an LNG-based thermal power plant in Cheongju, North Chungcheong Province, where its main plant is located. It earmarked 800 billion won to build the power plant.

South Korean companies' plans to build power plants
Company	Type of power plant	Electricity generation capacity	When to start operation
SK Chemical	LNG-based thermal power	300 MW	2024
Hyundai Motor	LNG-based thermal power	184 MW	2025
LG Chem	Biomass	Not available	2025
Hanwha Impact	Hydrogen	Not available	2023*
*The year when Hanwha expects to complete a feasibility study				(Source: Companies)

Write to Jeong-Min Nam at peux@hankyung.com
Yeonhee Kim edited this article.