OREANDA-NEWS.   Hanwha Chemical is the first Korean company to enter Iraq’s petrochemistry industry. On December 19th, Han-Hong Bang, CEO of Hanwha Chemical, met with Vice Minister of Industry of Iraq, Mohammed Zain, at the Hanwha headquarter office in Seoul and signed a Letter of Intent (LOI) for the construction of an ethylene production facility (cracking center) which will be used to produce ethane, natural gasoline and petrochemistry products in Iraq.

Hanwha Chemical expects that the entire scope of the investment would reach about USD 40 billion, and has plans to construct an ethane and natural gasoline decomposition facility with a capacity of 1 million tons, then carry forward with construction of a large-scale plant to produce petrochemistry products such as polyethylene. As of now, Hanwha Chemical operates Yeochun NCC decomposition facility, a joint venture with Daelim which has 1.9 million tons of annual capacity as well as 800 thousand tons of annual capacity of polyethylene production. Hanwha Chemical has planned to proceed with a detailed feasibility study with the Iraqi Government with the start of this LOI contract.

The purpose of this Iraq venture is to obtain raw materials at a lower cost. In recent years, the cost of naphtha-based (crude oil) products has become lowered due to the spread of ethane gas products coming from the Middle East and North America. In actuality, ethane gas products are 30~50% cheaper than naphtha-based product. To remain competitive, the petrochemistry industry has devoted all their energy to ensure cost competitiveness. Hanwha Chemical plans to have equivalent cost competitiveness with product of Middle East and North America by entering ethane and natural gasoline producing regions directly and constructing large-scale production facilities. Iraq is known to have an abundance of cheap raw materials but since the region does not have fully developed petrochemical industry, Hanwha Chemical sees this as an opportunity to for potential growth.

This project was influenced by the close relationship with Iraq Government through Bismayah New City Project. The Iraqi Government was very impressed with Hanwha Group’s adeptness and dedication to the Bismayah Project, which raised awareness of Hanwha as a reliable partner.

Hanwha Chemical is the first Korean petrochemistry company to gain experience in the Middle East. Hanwha Chemical entered the Saudi Arabian market in 2009 by establishing IPC (International Polymers Co.) a joint venture with Shipchem, a Saudi Arabian petrochemistry company. Commercial production will begin in first quarter of next year and annual production capacity would be 200,000 tons.