* SK Innovation will invest nearly KRW 100 billion into the Ulsan CLX facility for green fuel production.
* Response to environmental regulations with green fuel production through desulfurization facility
SK Innovation’s subsidiary, SK Energy, has decided to build a new VRDS
(Vacuum Residue Desulfurization) facility (with a production capacity of 40,000
barrels per day) in the SK Ulsan Complex, with a KRW 100 billion investment by
This decision is interpreted as providing a preemptive response to the
decision made by the IMO (International Maritime Organization) to strengthen
the regulation of sulfur content in bunker fuel from 3.5% to 0.5%.
Generally speaking, the low sulfur content in fuel products is considered
to be better when it comes to its ecological footprint. While diesel fuel, used
for land transports, has very strict regulations of less than 0.001% in sulfur
content, the bunker fuel used in maritime vessels has faced constant criticism
with its comparatively lax regulation of 3.5% and the resulting contribution to
SK Innovation’s new investment is expected to place them in a strong position
to discuss the upcoming challenges posed by the new regulation, such as the
lack of supply in the global market and the consequent rise in prices.
Low-cost vacuum residues (residue from vacuum distillation process), which
are used to produce asphalt and high-sulfur content fuel, are expected to face
significant declines in demand and prices because of the new regulations. SK
Innovation’s new investment in desulfurization facilities will allow the
company to process the residue into high-value products such as low-sulfur
fuel, diesel, or naphtha, helping to a diversified profit structure.
Furthermore, desulfurization facilities are also expected to stabilize the
supply of lube oil production processes, further helping to improve the
profit structure of the company.
Coupled with the new possibilities for sourcing low-cost crude oil, SK
Innovation’s new competitiveness in the form of optimization is also expected
to experience a surge.
CEO Jun Kim of SK Innovation commented: “This investment is intended to
strengthen the fundamental competitiveness of our oil business” and “we will
continue working to provide a preemptive response toward the changes in the
global energy market.”