S-Oil announced Monday it has signed a contract to supply 5.5 trillion won ($3.9 billion) worth of polyethylene to SABIC, a subsidiary of its parent company Saudi Aramco, over five years starting this year.
The deal secures an outlet for a portion of the output from the Shaheen Project, South Korea's largest petrochemical plant scheduled for completion in the second half of this year.
The supply agreement runs from January 2025 through December 2030. The contract value of approximately 5.5 trillion won was calculated based on estimated supply volumes, projected international prices, and exchange rates over the period. This represents more than half of the Shaheen Project's total investment of 9.26 trillion won.
The long-term contract provides S-Oil with a stable sales channel for PE products from the large-scale petrochemical facility amid high volatility in the global PE market. The agreement is expected to enhance sales stability and reduce early-stage business risks.
SABIC is recognized for its extensive marketing capabilities and broad customer network built over years in the global petrochemical market. S-Oil expects to generate synergies in overseas markets by combining SABIC's global sales infrastructure with its own production competitiveness.
"This contract marks an important milestone in launching our Shaheen Project PE products into the global market," an S-Oil official said. "Through cooperation with our major shareholder's affiliate, we will establish a stable export foundation to secure early business stability while contributing to strengthening the global competitiveness of Korean PE products."
The official added, "We expect the successful commercialization of the Shaheen Project will have positive effects on reinforcing the domestic foundation of South Korea's petrochemical industry."