Hyundai E&C consortium breaks ground on $7 bn S-Oil Shaheen project

A South Korean consortium led by Hyundai Engineering & Construction Co. has embarked on building 9.26 trillion won ($7 billion) petrochemical facilities for S-Oil Corp., the Korean unit of Saudi Arabian Oil Co.

The consortium, which includes Hyundai Engineering Co., Lotte Engineering & Construction Co. and DL E&C Co., on Thursday broke ground on the facilities at S-Oil’s Onsan industrial complex in Ulsan, southeast of Seoul.

The megaproject titled Shaheen, meaning falcon in Arabic, aims to expand S-Oil’s capacity to manufacture petrochemical products such as ethylene and polyethylene.

The Shaheen project is the single largest investment by Saudi Aramco in Korea’s refining and petrochemical industry.

The project will build the world’s biggest naphtha-fed steam cracker, using Saudi Aramco’s proprietary thermal crude to chemicals (TC2C) technology, the contractors said.

The construction work is divided into three parts, or packages.

Hyundai E&C, Hyundai Engineering and DL E&C are responsible for Package 1, which involves the construction of the steam cracker and TC2C facilities.

Package 2, building high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE) production facilities, will be handled by Hyundai Engineering and Lotte E&C.

Lotte is responsible for Package 3, which involves the construction of tanks.

When completed in 2026, the facilities will produce 1.8 million tons of ethylene and 750,000 tons of propylene annually. The feedstock, in turn, will be translated into 1.2 million tons a year of petrochemicals such as HDPE and LLDPE.

SHIFT FROM CRUDE REFINING

S-Oil, Korea’s third-largest oil refiner, has been striving to diversify its business portfolio away from crude refining to limit the negative impact of volatile oil prices on its profits.

As a result of the latest investment, petrochemicals would account for 25% of the company’s total sales revenue by 2030, up eight percentage points from 17% in 2021.

S-Oil is 63.4% owned by Saudi Aramco, which is controlled by the Middle Eastern country’s de facto leader Mohammed bin Salman, the crown prince and prime minister of Saudi Arabia.

“The Shaheen project recognizes our consortium’s engineering, procurement and construction (EPC) expertise. With the deal, we expect to win more big projects in the petrochemical and plant engineering businesses,” said a Hyundai E&C official.

Hyundai E&C’s partner Hyundai Engineering is the plant engineering and construction unit of Hyundai Motor Group.

DL E&C is the construction unit of DL Group, formerly known as Daelim.

Write to Eun-Ji Shim at summit@hankyung.com

In-Soo Nam edited this article.