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Saudi APC to join SK Gas in $900 million South-Korea Ulsan Propylene

APC and SK Gas selected CB&I licence for Ulsan PDH

The downstream industrial group Advanced Petrochemical Company (APC) from Saudi Arabia and the midstream company SK Gas Corporation Ltd (SK Gas) from South-Korea signed a memorandum of understanding (MOU) to build a propane dehydrogenation (PDH) plant in Ulsan on the southwest coast of South Korea.

Headquartered in Damman, Saudi Arabia, with main operations in Al-Jubail Industrial City, APC is a petrochemical company focusing in the production of polypropylene.

SK-Gas_APC_Ulsan_PDH_CB&I_Catofin_Polypropylene_mapAfter licencing CB&I Lummus Catofin PDH technology, APC is producing 450,000 tonnes per year of polypropylene, one of the most commonly used building block of the petrochemical industry.

Based in Seoul, South Korea, SK Gas belongs to the Chaebol SK Group to focus on the storage and distribution of liquid petroleum gas (LPG) such as butane and propane.

Very active in Asia, SK Gas is operating LPG import terminals and distribution networks in China, Japan, Malaysia, Singapore and South Korea.

Despite the fast growing market in Asia for LPG, the added value on storing and distributing remains rather limited while the gas prices continue to decline in this region on the upstream side and the demand for petrochemical products evolves steadily on the downstream side.

In this context, SK Gas is willing to expand its added value in integrating the much more rewarding and stable activities of petrochemical transformation.

CB&I Lummus completed APC-SK Gas Ulsan PDH

As the first step in that direction, SK Gas selected CB&I Lummus in March 2013 to provide engineering services for a greenfield propane dehydrogenation project:

 – Catofin PDH technology licence

 – Front end engineering and design (FEED)

For its first production unit to be built, SK Gas selected Ulsan in South Korea.

SK-Gas_APC_Ulsan_PDH_CB&I_Catofin_PolypropyleneDesigned to produce 600,000 t/y of propylene, SK Gas Ulsan PDH unit should be the largest ever built in South Korea.

From the costs estimates provided by CB&I Lummus from the FEED, this world-scale Ulsan PDH projects should require $900 million capital expenditure.

Then SK Gas second step to move downstream into the petrochemical production was to find a partner to provide the South Korean company with the expertise to build, own and operate such large scale facility.

In that respect, the Saudi company APC appeared as a perfect partner with a similar size and the experience to work with South Korean companies since its own polypropylene plant had been executed by Samsung Engineering.

According to the MOU signed between SK Gas and APC , should take a minimum of 25% stake in the Ulsan PDH joint venture.

As a third step, SK Gas and APC are expecting to enter full biding agreement in the next twelve months and start the engineering, procurement and construction (EPC) of the Ulsan PDH project in expecting the first production of polypropylene in 2016.

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