Yeosu Petrochemical Complex Restructuring Plan Nears Government Approval

The South Korean government is poised to approve a significant restructuring plan for the Yeosu petrochemical complex, the nation's largest. Industry sources anticipate government approval within the week for the proposal submitted by four major companies: Yeocheon NCC, Lotte Chemical, Hanwha Solutions, and DL Chemical.

The core of the restructuring plan involves the closure of Yeocheon NCC's second and third naphtha cracking units. The remaining first unit will be integrated with Lotte Chemical's Yeosu plant, leading to the establishment of a new, jointly owned entity. Currently, Hanwha Solutions and DL Chemical co-manage Yeocheon NCC. Under the new structure, Lotte Chemical, Hanwha Solutions, and DL Chemical would each hold a 33.3% stake in the newly formed company.

This move follows similar restructuring efforts in other major industrial complexes. The Daesan complex in South Chungcheong Province has already seen its restructuring plan move to the Fair Trade Commission's review stage. There, HD Hyundai Chemical will absorb Lotte Daelim Petrochemical, and Lotte Chemical will acquire shares in the merged entity, resulting in Lotte Chemical and HD Hyundai Oilbank each holding a 50% stake in HD Hyundai Chemical.

However, the broader petrochemical landscape faces potential challenges. The upcoming Shaheen project by S-Oil in Ulsan, a massive investment expected to begin full operations next year, will introduce substantial new ethylene production capacity. With an annual ethylene output of 1.8 million tons, the Shaheen project alone could account for half of the government's target reduction in NCC capacity. This has led to industry concerns that the new ethylene supply could dilute the intended effects of the ongoing structural reforms.