S-OIL CORPORATION
Reaping Joint Venture Benefits through
Straight Licensing
Before
Finding a trustworthy and technically sophisticated entity to partner with in our entry into the petrochemical business.
After
Gaining a solid foothold in South Korea in the petrochemical business, backed by reliable technical capabilities and support acquired from straight licensing.
What made you select Sumitomo Polypropylene License?
"We planned the state-of-the-art S-OIL New Complex (RUC & ODC) project, which is a huge project with an investment of 5 trillion won, with no room for failure. As a result, we were looking for reliable partners by way of joint ventures in order to ensure that we can achieve unmitigated success in our petrochemical business. Specifically, we were targeting the following key strengths in any partnerships:
- Cutting-edge process technologies,
- Marketing capability for the products,
- R&D base process technologies and products development, and
- Substantial presence in the petrochemical business
To realize these expectations, we initially considered Sumitomo Chemical as a potential joint venture partner, based on their track record in the petrochemical business joint venture business in Saudi Arabia with our parent company Saudi Aramco. Sumitomo Chemical however offered to instead provide the Polypropylene technology as a straight license, and whilst we were hopeful on how well this offer by Sumitomo Chemical would work in relation to our original expectations, we were nonetheless also slightly apprehensive given our inability to visualize how a straight license could replicate the benefits of a joint venture partnership."
How did Sumitomo Polypropylene License help S-OIL?
"We received pre-marketing samples from Sumitomo Chemical and distributed them to our potential customers, thereby demonstrating that our new products would be of high quality to users in the early stages and which afforded us the wherewithal to establish a foothold in the new PP market. Furthermore, even though we originally required a larger capacity than Sumitomo Chemical's existing plants, we were able to obtain a PP technology license that was fully customized to our requirements by incorporating the latest Polypropylene technology. Our initial concerns about introducing new technology and entering new markets were dispelled and transformed into the confidence that ultimately drove our future vision.
During the start-up of the Polypropylene plant, we encountered unforeseen situations normally expected during plant start-ups, but we were able to respond quickly and successfully through the generous support provided by Subject Matter Experts dispatched by Sumitomo Chemical for the plant start-up. As a result, we encountered no major issues with Sumitomo Chemical’s Polypropylene technology and this success in the start-up also enabled us to achieve on-target market entry for our products. Even after start-up, the plant has continued to operate stably not only at the levels of guaranteed performances but also smooth operations achieved through timely technical support from Sumitomo Chemical, and early identification of potential risks before they develop into major issues. We can therefore confidently conclude that a relationship of mutual trust between a reliable licensor and a motivated licensee based only on straight licensing can also lead to benefits usually reaped from joint partnerships.
Meanwhile, the TS&D Center, which was built with the knowledge of Sumitomo Chemical's researchers, has sufficient equipment and is expected to continue making sustainable contributions to our future technological developments."
What is S-OIL’s future outlook?
“We successfully completed RUC/ODC Project, which is the largest project of the company, in 2018. And it broadened our Petrochemical business spectrum into olefin downstream products. Going forward, we will continue active investments in high value-added products and through this manner, we will inch ever closer to achieving our corporate vision as 'The most competitive and creative and clean energy & chemical company'.”
Remarks by Sumitomo Chemical
For S-OIL, the RUC/ODC project was a huge petrochemical project that could not be allowed to fail, and as it was their first Polypropylene production, they had genuine concerns whether they would be able to execute it successfully without dedicated and committed joint venture partners. S-OIL's high motivation and flexibility to entertain other viable solutions other than joint partnership allowed them to consider our innovative and proprietary technology through straight licensing. Through a combination of trust in Sumitomo Chemical’s technology and their determination to succeed, S-OIL was able to make the project not only a success but also gained firm technical capabilities and dedicated support from Sumitomo Chemical as a reliable licensor. On the whole, their original concerns were transformed into an unmitigated success through which they gained a significant presence as a Polypropylene manufacturer in South Korea.