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Hyundai Oilbank looks to expand hydrogen footprint, cut refining portfolio


South Korea moving swiftly on build hydrogen facilities: Platts Analytics

Hyundai Oilbank to set up fuel cell separator facility in Daesan

Hydrogen investments would lead to relatively smaller oil refining presence

From setting up separators for fuel cells to expanding the retail fuel network, South Korea's Hyundai Oilbank is pushing ahead with its hydrogen investment plans, joining a growing list of refiners in Asia who are looking to diversify their portfolio and make cleaner fuels a part of their energy mix.

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The recent decision by Hyundai to produce separators for fuel cells and grow its hydrogen presence is in line with the country's roadmap for an hydrogen economy that has seen the country's companies announcing major plans -- such as setting up the world's largest liquid hydrogen plant and starting commercial production at the world's first byproduct hydrogen-based fuel cell power plant.

"The Korean chaebols are not only focusing on selling their hydrogen expertise and equipment overseas to establish new export markets but it is clear that South Korea also wants to develop a leading domestic market for hydrogen," said Edgare Kerkwijk, board member of the Asia-Pacific Hydrogen Association.

"Hyundai Oilbank's plans are a part of Korea Inc's drive towards becoming a leader in the hydrogen industry in Asia-Pacific and potentially globally," he added.

A Hyundai Oilbank official said in the week ended Aug. 28 that the company had firmed up plans to set up the fuel cell separator facility in its main complex in Daesan on the west coast.

"We will conduct a test-run of the facility by the end of this year, which will be followed by actual tests of the separators, jointly with local automakers within next year -- so we we can start mass production of fuel cells separators in 2023," the official said.

The separator is a key component of a hydrogen fuel cell stack, which is assembled by stacking hundreds of unit cells composed of cathodes and anodes. The separator serves as a channel for supplying hydrogen to the anode and oxygen to the cathode, and also functions as a support between unit cells constituting the stack.

Blue hydrogen plans

The company has set a goal to produce 100,000 mt/year of blue hydrogen by 2025. Blue hydrogen refers to hydrogen produced from fossil fuel in a process that captures carbon dioxide emissions. It also plans to establish 180 hydrogen fueling stations by 2030.

"The company aims to raise Won 500 billion [$428 million] in annual sales from the hydrogen fuel cell business and W100 billion in an annual operation profit by 2030," the official said.

Hyundai Oilbank has also been working on some other hydrogen initiatives.

In April, it signed a memorandum of understanding with US hydrogen giant Air Products & Chemicals to use its technology to produce hydrogen from its crude oil byproducts and natural gas.

Under another agreement signed earlier this year, Hyundai Oilbank , the oil refinery unit of HHIH, will import LPG from Saudi Aramco to convert into blue hydrogen -- hydrogen produced from fossil fuel in a process that captures CO2 emissions.

According to Platts Analytics, the government is pushing ahead with plans for the construction of hydrogen production facilities for vehicles in six cities nationwide. South Korea intends to reduce GHG emissions by 24.4% compared with 2017 levels by 2030.It further aims to achieve net-zero emissions by 2050.

Smaller refining footprint

South Korea is forecast to produce around 860 million barrels of oil products in 2021, down 2% from in 2020, according to multiple South Korean fuel marketers and refinery sources surveyed by S&P Global Platts. The country's fuel production has been trending lower since reaching the peak at 940.1 million barrels in 2017, latest data from state-run Korea National Oil Corp. showed.

Hyundai Oilbank's massive investment in the hydrogen sector would reduce the company's mainstream oil refining business, a senior company official said.

Although the company has not announced any official target, the official said Hyundai could potentially aim to reduce its mainstream oil refining business to 45% of its total revenues by 2030, from 85% currently.

Hyundai Oilbank, the smallest in South Korea's four refiners, runs two CDUs with a combined capacity of 520,000 b/d in the Daesan complex.

To help fund its hydrogen-focused green energy projects Hyundai Oilbank has recently decided to sell off a 90% stake in its fully-owned oil storage terminal in Ulsan.

In October last year, President Moon Jae-in declared that South Korea will achieve carbon neutrality by 2050 by replacing coal-fired power generation with renewable sources and internal combustion engines vehicles with hydrogen-powered and battery-based electric vehicles.

Earlier this month, the government unveiled three potential roadmaps to achieve the goal of carbon neutrality by 2050, focusing on restricting consumption of coal and LNG for power generation. The government roadmaps fall short of specifying reduction target for each industry.

Under the "roadmap for hydrogen economy," South Korea will produce 81,000 hydrogen-powered cars by 2022, which will increase to 6.2 million units by 2040, which is significant given South Korea has a total of 22 million vehicles on the road, using mainly gasoline , diesel and LPG as fuel.