ID :
46076
Tue, 02/17/2009 - 14:19
Auther :

(News Focus) S. Korean refiners set to expand investment in 2009


By Nam Kwang-sik
SEOUL, Feb. 17 (Yonhap) -- South Korea's top three refiners are poised to
increase their spending on petrochemical plants and oil exploration projects this
year as part of an effort to secure new growth engines.
The three refiners -- SK Energy Co., GS Caltex Corp. and S-Oil Corp. -- saw their
earnings tumble in 2008 from the previous year due to lower refining margins and
the South Korean won's depreciation against the U.S. dollar.
Last year's dismal performances have prompted the companies to come up with a new
strategy. They now plan to put more money into non-core businesses in order to
diversify their profit sources, market watchers say.
S-Oil, the nation's third-largest refiner, will spend 865.8 billion won (US$600.4
million) on expansion and maintenance of plants and other projects, nearly a
2.5-fold increase from the previous year.
The refiner will invest 620 billion won to expand its para-xylene plant and set
up an alkylation unit in Ulsan, an industrial city about 400 km southeast of
Seoul.
Para-xylene is used to produce purified terephthalic acid (PTA) which is used in
making polyester. Alkylation is a method of processing petrol that leaves it more
stable for storage and with fewer environmentally harmful hydrocarbons.
The alkylation unit and the para-xylene plant will start commercial production in
2009 and 2011, respectively.
"We are focusing our investment on the expansion of a petrochemicals plant to
create a future growth engine," said Lee Dong-hoon, a spokesman for S-Oil.
No. 2 refiner GS Caltex will increase its spending on facilities, oil exploration
projects and renewable energy projects by 36 percent to 1.5 trillion won this
year.
The company says 1 trillion won will be spent on the construction of a third
plant to process heavy oil into transportation fuel. The plant will be built in
Yeosu, a port about 450 km south of Seoul, and is slated for completion by 2012.
When the project is finished, it will boost the company's daily processing
capacity to 258,000 barrels from the current 153,000 barrels, and heavy-oil
processing plants will represent about 40 percent of its total refining
facilities -- up from 22 percent.
The move will make GS Caltex the nation's largest processor of heavy oil,
followed by S-Oil with 25 percent and SK Energy with 18 percent, according to
data from Meritz Securities Co.
GS Caltex will also spend 500 billion won on oil exploration projects in
Southeast Asian countries such as Vietnam, Thailand and Cambodia, and renewable
energy projects including fuel-cell development.
"The oil fields in Vietnam, Thailand and Cambodia are still in the exploration
phase. It will take a while to extract any oil from them," said K. S. Cho, a
spokesman for GS Caltex.
In contrast to S-Oil and GS Caltex, industry leader SK Energy has set up a
flexible investment plan this year due to growing uncertainty over the global
economy.
The company says that depending on market conditions, its capital spending may
reach a maximum of 2 trillion won or a minimum of 1 trillion won. SK Energy made
investments totaling 1.7 trillion won last year.
ksnam@yna.co.kr
(END)

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