South Korean refiner S-Oil's construction of Aramco-funded Shaheen plant passes halfway mark

S-Oil's refinery-integrated petrochemicals plant project, Shaheen, is progressing well as construction of the downstream facility, funded by Aramco Overseas, recently passed the halfway mark, sources at the South Korean refiner said Feb. 19-21.

The project, which involves an investment of Won 9.258 trillion, or around $6.45 billion, is the largest in the history of the domestic petrochemical industry. Engineering, procurement and construction works have surpassed 55% completion and are progressing smoothly toward completion in the first half of 2026, according to senior operation and product marketing managers at S-Oil with direct knowledge of the matter.

South Korea's third-largest refiner S-Oil launched the large-scale Shaheen project in March 2023 and is confident it could start commercial operations at the petrochemical plant in 2026, which will produce up to 3.2 million mt/year of basic petrochemical feedstocks such as ethylene, propylene, butadiene and benzene from naphtha and off-gas, according to the company sources.

Shaheen is named after the Arabic word for falcon, Saudi Arabia's national bird, as it is funded by Aramco Overseas, a subsidiary of Saudi Aramco, which holds a 63.4% stake in S-Oil.

S-Oil plans to supply the basic petrochemicals produced at the facilities, which have secured excellent cost competitiveness and high energy efficiency, primarily through pipelines to domestic petrochemical downstream companies.

The plant will help S-Oil diversify its business portfolio from "crude to chemicals" for sustaining growth, according to the refiner.

"The project will raise S-Oil's petrochemical portion to 25% by 2030 from the current level of 12%, playing a pivotal role in diversifying its fuel-weighted business."

"By supplying raw materials to downstream companies in a timely and stable manner, we expect to not only provide transportation cost reduction effects within the value chain but also create a competitive petrochemical industry cluster that will positively impact local economic revitalization and long-term national industrial competitiveness," according to an S-Oil official cited by local media.

The new facility could potentially lift South Korea's overall demand for primary petrochemical feedstock naphtha, though tepid petrochemical margins amid oversupply in Chinese downstream products remain a major concern for the industry, according to light distillate traders and industry analysts based in Seoul.

South Korea consumed 446.834 million barrels of naphtha in 2024, up 4% from 429.749 million barrels in 2023, data from state-run Korea National Oil Corp. showed. The country's naphtha imports also rose 2.8% to 246.69 million barrels in 2024.

S-Oil runs three crude distillation units: No. 1 with 90,000 b/d, No. 2 with 240,000 b/d and No. 3 with 250,000 b/d capacity, and a condensate fractionation unit with a capacity of 89,000 b/d, which makes its total refining capacity of 669,000 b/d.

The refiner also runs two residue fluid catalytic crackers: No. 1 with 73,000 b/d and No. 2 with 76,000 b/d capacity, at its Onsan complex.