(Seoul = Yonhap News) Reporter Kim Min-ji = One year has passed since the petrochemical industry signed an autonomous agreement to reorganize its business structure, but it still falls short of the reduction target proposed by the government, raising concerns that it may be just a waste of time.
While structural reform has become visible in Daesan and Yeosu industrial complexes, discussions are still sluggish in Ulsan and other industrial complexes, so some point out that the government is virtually ignoring free riding.
According to the industry on the 6th, H&L Advanced, the 'first reorganization of the petrochemical business', held a launch ceremony on the 4th and began full-scale business.
It has been about a year since the petrochemical industry held a voluntary agreement ceremony on August 20 last year and agreed to reduce naphtha cracking facilities (NCC) by 2.7 to 3.7 million tons and convert to high-value, eco-friendly products.
HD Hyundai Oilbank and Lotte Chemical each hold a 50% stake in H&L Advanced. Cho Nam-soo, former CEO of HD Hyundai Chemicals, and Cheon Yang-sik, former CEO of Lotte Daesan Petrochemical, were appointed as co-CEOs, and employees of both companies are said to have formed an integrated business unit organization.
H&L Advanced plans to suspend operation of 1.1 million tons of NCC over the next three years.
If the 'Yeosu No. 1 Project' between Yeocheon NCC, Lotte Chemical, Hanwha Solutions, and DL Chemical, which is currently undergoing a business combination review by the Fair Trade Commission, is approved, an additional 1.39 million tons are expected to be reduced.
However, the total reduction amount of these two projects is 2.49 million tons, which is still short of the originally proposed target amount (at least 2.7 million tons).
In the industry, despite the government's initial emphasis on speed, controversy over fairness is being raised as no significant penalty is imposed on industrial complexes that have made no progress in project discussions even after a year of announcement.
Previously, last year, Minister of Trade, Industry and Energy Kim Jeong-kwan repeatedly emphasized, "We will respond sternly to companies that try to free ride on structural reorganization," and visited the site and requested a speed-up in business reorganization.
However, despite this request, it has been reported that there has been no progress in the restructuring of the Ulsan industrial complex for nearly a year. This is because the interests between S-Oil, SK Geocentric, and Korea Petrochemical are different, and controversy surrounding S-Oil's Shaheen Project, which is scheduled to begin initial operation within this year, continues.
Once the Shaheen project is fully operational, it will be able to produce 1.8 million tons of ethylene per year. A significant portion of the 2.49 million tons reduced in petrochemical reorganization 1 and 2 is being mass-produced again.
An industry official said, "Companies that believe in the government's hard-line stance against free riding and quickly begin to reduce NCC are bound to suffer losses. In order to improve industrial competitiveness, which is the fundamental goal of restructuring, we must all work together to control production."
Another official said, "Because facility reduction or integration is a short-term measure to increase the competitiveness of the domestic petrochemical industry, there is a set 'golden time' when it can be effective. We need to buy time through rapid restructuring and use it to convert to high value-added products and diversify raw materials."
