SK Geocentric said on the 20th that it signed a strategic business agreement (MOU) with SK Gas on the 19th to introduce ethane.
SK Geocentric said the agreement was pursued to secure a stable ethane supply chain and feedstock competitiveness while improving the structure of the petrochemical industry. Based on the MOU, the two sides plan to spell out the timing and volume of ethane supply.
Until now, SK Geocentric has run feedstock for its naphtha cracking center (NCC) mainly on naphtha, but it plans to push for the introduction of ethane to diversify feedstock and review process efficiency measures to strengthen NCC competitiveness.
Ethane is a feedstock with lower price volatility than naphtha and higher ethylene production efficiency. With the expansion of shale gas production in North America, major petrochemical corporations in China, India, and Europe are widely using ethane. SK Geocentric said, "In North America, ethane supply based on shale gas is structurally stabilized," and added, "Even when factoring in maritime transportation expense and terminal operation expense, ethane's cost competitiveness is superior to naphtha."
Going forward, SK Gas will oversee the overall supply chain in North America, including purchasing, transportation, and price negotiations, and build infrastructure for stable feedstock procurement. Based on its existing liquefied petroleum gas (LPG) and liquefied natural gas (LNG) infrastructure, SK Gas is developing a terminal capable of storing and unloading ethane. Through this, it plans to stably supply feedstock to major corporations in the Ulsan petrochemical complex, including SK Geocentric. Through this, the two companies plan to establish an integrated supply chain covering the entire process from ethane import to consumption to secure both price competitiveness and supply stability.
Choi Ahn-seop, president of SK Geocentric, said, "By cooperating with SK Gas on the ethane business, we will preemptively raise NCC competitiveness and, based on cost competitiveness, operate the business stably even amid the petrochemical industry's structurally sluggish phase."
Yoon Byung-seok, president of SK Gas, said, "Ethane is a next-generation energy source that can be used not only as a feedstock for the petrochemical industry but also for hydrogen production and as a fuel for power generation, and it will accelerate the diversification of feedstock and the advancement of the structure of the domestic petrochemical industry."