[Moneyverse] 50 Years of Creating New Value from Oil

From Residual Oil to High-Value Chemicals
S-OIL's "Trajectory of Value Innovation"

"Oil is discovered in the human mind."

Energy expert Daniel Yergin wrote in the concluding section of his book The 2030 Energy War about how to meet the world's growing energy demand. As grounds for optimism about energy supplies, Yergin pointed to the fact that "the potential to harness the most important of all resources is growing," emphasizing, "That resource is human creativity." He then quoted the sentence above, calling it "a famous remark by a geologist."

The person who made that remark was American geologist Wallace Pratt. Pratt expressed this view in 1952 in the Bulletin of the American Association of Petroleum Geologists. The "mind" he referred to can be understood as "determined creativity." With that mindset, people have explored for, discovered, and extracted oil and natural gas beneath the earth and under the sea. Around 2000, they began producing shale gas and shale oil, which had previously been left untouched, by advancing horizontal drilling and hydraulic fracturing technologies.

This has not been limited to the upstream sector, where buried crude oil and natural gas are explored for, discovered, and extracted through drilling. The power of the human mind has also been at work in the downstream sector, where crude oil is refined into petroleum products such as gasoline and diesel, and petrochemical products, including ethylene, are produced from naphtha and other feedstocks. S-OIL is one company that has carried out this process in Korea's downstream sector.

Since becoming the first company in Korea to produce base oils in 1981, S-OIL has supplied premium products to major markets around the world. Base oils have supported S-OIL's long-term growth, thanks to their high added value and the stability of their market conditions.

S-OIL took the lead in building a bunker C cracking center (BCC), which began full-scale operations in 1997. It began using low-value bunker C fuel oil as feedstock to produce higher-value light oils. The BCC was called an "oil field above ground" because it enabled the company to produce more gasoline and diesel - products in high demand that command higher prices - from the same volume of crude oil.

A scene from an advertisement marking S-OIL's 50th anniversary. S-OIL

This improved profitability while also making it possible to use petrochemical feedstocks, which had previously been used to make gasoline, to produce petrochemical products. This laid the foundation for S-OIL to enter the petrochemical sector in earnest.

S-OIL has since expanded its petrochemical business. This was a strategic choice to increase the added value of crude oil and diversify its business. More recently, it has also taken on greater significance as a response to the spread of carbon-neutral policies and the slowdown in demand for transportation fuels. The petrochemical business has grown from the BTX plant and Xylene Center to include the second Aromatics Complex.

S-OIL's large-scale investment in petrochemicals began with the Residue Upgrading Complex and Olefin Downstream Complex (RUC-ODC). The Residue Upgrading Complex (RUC) reprocesses residual oil, a byproduct of crude oil refining, to produce gasoline and propylene. The Olefin Downstream Complex (ODC) uses propylene produced at the residue cracking facility to make high-value petrochemical products such as propylene oxide and polypropylene. The RUC-ODC Complex was the first in the world to apply technology with higher yields than existing processes.

The record-setting achievements in being first, best, and largest continue with the Shaheen Complex, S-OIL's second-phase petrochemical investment. The complex is the first in the world to use TC2C (Thermal Crude to Chemical) technology developed by its parent company, Aramco. TC2C processes crude oil in a way that differs from conventional refining to convert it into petrochemical feedstocks. According to S-OIL, the technology can convert more than 70% of crude oil into petrochemical feedstocks. The Shaheen Complex also houses one of the world's largest single-train steam crackers, with an annual ethylene production capacity of 1.8 million tons.

Mechanically completed in the first half of this year, the Shaheen Complex is scheduled to begin phased operations in January next year. Thanks to its high yields, the petrochemical products made there are price-competitive even compared with products from China. Some of the products will be supplied by pipeline to companies that use them within the Onsan National Industrial Complex.

Investments spanning base oils, the BCC, and Shaheen can be seen as efforts to create new value from oil. As S-OIL marks its 50th anniversary this year, it expresses this commitment through the following mission: "We continuously innovate the value of resources for a better life for humanity."

Baek Woojin, economic columnist

This content was produced with the assistance of AI translation services.