South Korea's SK Geocentric (SKGC) announced its plan to switch from using naphtha to ethane as a raw material at its naphtha cracking unit (NCC) in Ulsan. This change aims to make the plant more competitive.
SKGC has signed a business agreement with SK Gas to develop the ethane market. The two companies plan to create a system for importing and using ethane, which will help them keep costs low and ensure a stable supply.
SKGC’s NCC plant in Ulsan currently produces 680,000 tons of ethylene and 340,000 tons of propylene each year, mostly from naphtha. But SKGC wants to change its raw materials. Ethane is cheaper than naphtha, less volatile in price, and more efficient at making ethylene.
Ethane is already used widely in countries like China, India, and Europe, thanks to the growth of shale gas production in North America. The U.S. is the world's main exporter of ethane and is expected to increase its exports by about 33% by 2026.
Even after considering transport and handling costs, SKGC believes ethane will still be more cost-effective than naphtha.
SK Gas will build a terminal to store and unload ethane, which will supply SKGC’s Ulsan complex. The two companies will also work out the details of when and how much ethane will be supplied, but the exact timeline for the shift isn’t clear yet.
In addition to SKGC’s project, other South Korean companies like LG Chem, HD Hyundai Oilbank, and Hanwha TotalEnergies Petrochemical have also agreed to explore buying ethane together. They plan to build ethane storage and infrastructure at Daesan by 2028.