S-Oil halts fire-hit paraxylene plant, faces revenue loss

ULSAN, South Korea -- It looks inevitable that S-Oil Corp., the South Korean unit of Saudi Arabian Oil Co., will take a substantial revenue hit from the major fire at one of its paraxylene (PX) plants on Monday. 

The fire broke out in S-Oil’s PX-producing plant before dawn on July 29. The fire was fully contained a few hours later without any casualties but temporarily halted operations of the PX-producing plant in Ulsan, southeast of Seoul, S-Oil said.

PX is a raw material for purified terephthalic acid (PTA), which is used to produce polyester, fiber, PET bottles and film.

The plant’s shutdown will cause S-Oil some loss in revenue, considering that the facility was responsible for 7.1%, or 2.5 trillion won ($1.9 billion), of the company’s annual revenue last year, according to the company.

S-Oil runs two PX plants on the same site, of which the fire-hit plant is the smaller one with an annual capacity of 1.05 million tons.

The bigger PX plant will stay up and running, helping minimize production and sales losses, the company said.

S-Oil will determine how long the fire-damaged plant will remain shut after an inspection later.

PX is a transparent, colorless liquid and is hazardous to the body. However, no toxic gas leakage outside the plant was detected during the fire, according to the regional fire agency.

S-Oil is Korea’s third-largest oil refiner. It also produces lubricants and petrochemical products like PX, which make up 12% of the company’s entire revenue.

The company is currently building facilities at its main plant in Ulsan to manufacture petrochemical products such as ethylene and polyethylene under the Shaheen project, costing 8 trillion won.

It posted a 58.3% decline in operating profit last year due to lower refining margins amid weak global oil prices. Its total sales also dropped 16% to 35.73 trillion won.

Write to Sang Hoon Sung at uphoon@hankyung.com

Sookyung Seo edited this article.