Petrochemical Industry Enters Cost War... HD Hyundai Chemical Becomes First to Directly Import LNG from Overseas

HD Hyundai Oilbank 60% and Lotte Chemical 40% Joint Venture
Cost Reduction Efforts Spread Amid Restructuring Talks
Seeking Survival Strategies by Streamlining Distribution Steps

HD Hyundai Chemical is set to become the first company in the domestic petrochemical industry to directly import liquefied natural gas (LNG) in partnership with a major overseas energy corporation. As global oversupply and declining profitability accelerate restructuring across the sector, industry observers interpret this move as the start of a full-scale "cost war" aimed at survival through cost reduction.

On the 24th, HD Hyundai Chemical announced that it had signed a long-term direct import contract for LNG with TotalEnergies of France at its headquarters in Daesan, Chungnam. Under this agreement, the company will import 200,000 tons of LNG annually for eight years from 2027 to 2034. The imported LNG will be used as fuel for the naphtha cracking center (NCC) in Daesan. HD Hyundai Chemical is a joint venture between HD Hyundai Oilbank (60% stake) and Lotte Chemical (40%).

Jeong Imju, CEO of HD Hyundai Chemical (right), signed a long-term direct import contract for liquefied natural gas (LNG) with Ronan Bescond, Vice President of TotalEnergies, on the 24th at the headquarters in Seosan, Chungnam. HD Hyundai Oilbank

While domestic petrochemical companies have previously imported LNG directly, it has traditionally been brought in through Korea Gas Corporation or other large energy companies. A representative from HD Hyundai Oilbank stated, "Since 2021, we have been directly importing LNG through domestic energy companies, but this is the first case of a direct contract with a foreign company," adding, "The significance lies in securing price competitiveness by reducing distribution steps."

HD Hyundai Chemical estimates that using LNG as NCC fuel can reduce costs by about 21% compared to byproduct gas. Based on the annual volume of 200,000 tons, this translates to a reduction of several tens of billions of won each year. The company commented, "We expect this to enhance our business competitiveness through cost reduction," and added, "While this collaboration with TotalEnergies is still in its early stages and specific plans are yet to be determined, it marks a meaningful starting point for our entry into the global market."

The model of public-private cooperation utilizing public infrastructure is also drawing attention. HD Hyundai Chemical plans to lease LNG terminals from Korea Gas Corporation in Incheon, Pyeongtaek in Gyeonggi Province, Tongyeong in Gyeongnam, and Samcheok in Gangwon to improve inventory management and transportation efficiency.

This direct import initiative may also lead to discussions about introducing U.S. shale gas-based ethane to the Daesan Industrial Complex in the future. Hanwha TotalEnergies, a joint venture between Hanwha Impact and TotalEnergies, is located in Daesan. TotalEnergies, the parent company, already possesses a global LNG and ethane supply chain. Except for LG Chem, all petrochemical companies in Daesan have been considering ethane as an alternative feedstock to naphtha, viewing it as a way to significantly lower the production cost of ethylene.

HD Hyundai Chemical is currently in discussions with Lotte Chemical regarding a potential merger. Industry insiders interpret this direct import move as a preemptive strategy to maximize synergy in the event of integration. An industry source commented, "HD Hyundai Chemical's direct import of LNG is not just a raw material procurement contract, but a signal flare showing how the petrochemical industry will break through the cost war amid restructuring."

This content was produced with the assistance of AI translation services.