ULSAN, Jun. 13 (Korea Bizwire) — South Korean petrochemical companies plan to invest 14.5 trillion won (US$12.2 billion) by 2023, the finance minister said Thursday, in an apparent move to boost their output capacity.
Hong Nam-ki, the minister of economy and finance, also said the government is considering offering additional tax benefits to petrochemical companies to help revitalize the industry.
Petrochemical companies are facing difficulties in the wake of U.S sanctions on Iran and the growing trade dispute between Washington and Beijing.
Last year, Washington imposed the most biting sanctions ever on Iran following its exit from a 2015 nuclear agreement with Iran and five major world powers.
In May, the U.S. ended its sanctions waivers for South Korea, China, India and five other countries for Iranian oil imports, prompting Seoul to diversify its sources of oil imports.
Hanwha Total Petrochemical Co. — a 50-50 joint venture between Hanwha General Chemical Co. and French energy giant Total — said it has stopped importing Iranian condensate following the U.S. sanctions.
South Korean refiners and chemical firms had relied heavily on Iranian condensate to make various petrochemical products thanks to a stable supply and price competitiveness.
Hanwha Total Petrochemical said it has turned to Qatar and other countries to purchase ultralight crude, from which naphtha, a key raw material for petrochemicals, is derived.
Petrochemical companies said the suspension of the Iranian condensate supply would eat into their bottom line.
“The petrochemical sector is very important for the economy, and we are working to address their difficulties,” Hong said during a meeting with officials from SK Innovation Co. and smaller rivals in the southeastern industrial city of Ulsan.
The industry called for the government’s support to keep the companies’ competitiveness, noting the country’s petrochemical complex is in urgent need of improved infrastructure, industrial water and power.
Hong said the government is working to help local petrochemical companies.
South Korea’s petrochemical industry accounts for 6.1 percent of production in the country’s manufacturing sector and makes up 8.3 percent of exports.