Lotte Chemical, the petrochemicals manufacturing unit of South Korea’s Lotte Group, is seeking to expand its global business as production begins at its newly-established gas field and chemical complex in Surgil, Uzbekistan.

“Based on our success in Uzbekistan, we will continue to expand our ongoing businesses at home and abroad to rise up as a global petrochemicals company,” said Lotte Chemical CEO Huh Soo-young at a news conference in Seoul Thursday to mark the completion of the new plant.

Built with an investment of around 4.3 trillion won ($389 million) and Lotte Chem’s original technology, the Ustyurt Gas Chemical Complex stands as the biggest petrochemical facilities in Europe and Asia, according to Lotte Chemical.

The complex -- first envisioned after a strategic partnership sealed between Uzbekistan and South Korea in 2006 -- was established by Uz-Kor Gas Chemical LLC, a 50:50 joint venture established between Uzbekistan and a South Korean consortium led by Lotte Chemical (24.5 percent), Korea Gas Corporation (22.5 percent) and GS E&R (3 percent).

Set to officially begin commercial operations in January next year, the complex is able to process some 3.58 million tons of liquefied natural gas extracted and transported from its gas fields to the complex, located 110 kilometers away.

The plant will produce some 260,000 tons of methane to be sold to Uzbekistan’s state-run oil and gas company Uzbekneftegaz and process around 470,000 tons of ethane-based feedstock polymers including high-density polyethylene and polypropylene.

“From extracting liquefied natural gas in the upstream, to cracking and processing LNG into petrochemical products -- methane gas, HDPE and PP -- in the downstream, we have successfully built up a vertical integration system,” Huh said.

Lotte Chemical is eyeing Eastern Europe and Turkey as its main export markets, and is looking to gradually expand its presence in western China in the years to come, according to the CEO.

“As long as crude oil prices remain above $40, our petrochemical products based on low-cost ethane will remain competitive in the global market,” he said, emphasizing that the company “will be able to retain its profitability despite the geographic challenges faced in transporting the finished products out of Uzbekistan.”

Meanwhile, Lotte Chemical has been working to strengthen its global competitiveness by lessening its dependence on imported raw materials -- often subject to price volatility -- and increasing its use of low-cost ethane.

The chemicals firm is set to begin constructing a shale gas-based ethane cracking plant in the United States in partnership with U.S.-based Axiall Corporation, scheduled to begin production in 2018.

Lotte Chemical is considered one of Lotte Group’s core affiliates alongside its retail business. Lotte Chem posted an operating profit of around 817.8 billion won in the first half of 2015, up by 435.6 percent from the same period last year.

By Sohn Ji-young (jys@heraldcorp.com)