Petrochemicals, oil, big data, Uniqlo

Home > Business > Industry

print dictionary print

Petrochemicals, oil, big data, Uniqlo

테스트

“When Uniqlo Chairman Tadashi Yanai smiles, the petrochemical industry also smiles.” “Big data technology will determine the oil exploration market.”

Those two statements may seem incongruous, but industry observers say that to understand the future of petrochemical and oil industries that have been struggling to make profits, one needs to look into the theory that Uniqlo can save the former and big data will dominate the latter.

First, how did Asia’s largest casual clothing retailer become a key to the petrochemical industry? Experts say the answer starts with the production cycle of the apparel industry.

Instead of natural fibers, many clothes these days are made of chemical fibers.

For instance, polyester is made of purified terephthalic acid (PTA), which comes from paraxylene (PX) produced in the crude oil refining process.

PX also is used for making polyethylene terephthalate (PET) bottles, but because the consumption cycle runs from PX to PTA to polyester, the sales of clothes ultimately are the best indicator for the health of the petrochemical sector.

Analysts say the problem for local petrochemical companies in recent years has been their aggressive expansion of PX production. As business started to pick up, Korean companies faced a huge roadblock: China.

Massive PX investment from China precipitated an oversupply, depressing PX prices and ultimately reducing profitability. Some companies even decided to delay the opening of plants after having finished construction.

SK Innovation, the nation’s largest refiner, established a PX plant after spending big money, but only its Incheon plant is fully operational; the Ulsan plant is still performing test runs.

Samsung Total Petrochemicals finished its PX plant expansion after investing 1.6 trillion won ($1.6 billion), but it still hasn’t begun full operation.

GS Caltex’s planned PX investment, in association with Japan’s Showa Shell Sekiyu and Taiyo Oil, is also on hold. Chairman Hur Dong-soo, citing the oversupply, said no decision to proceed is likely this year.

Dongbu Securities analyst Yoo Duk-sang says the recovery of the petrochemical industry should be judged by the performance of fast-fashion brands like Uniqlo and Zara. If they are doing well, the PX market will also improve, he says.

According to his report, 41 million tons of PX were produced last year. In order to deplete this volume, at least 58.57 million tons of PTA and 51.89 million tons of polyester should be used.

By Yoo’s calculations - that an average consumer buys 12 kilograms (26.5 pound) of clothes a year and clothing weighs an average of 800 grams per piece - global consumers would each need to buy 2.5 additional pieces annually to use up all the PX that was produced last year and this year.

However, buying luxury suits from famous designer brands such as Giorgio Armani will not help.

“Giorgio Armani goes for lightweight products that weigh about 200 to 250 grams apiece, so it doesn’t really help PX companies,” says Yoo. “Because of the expansion of fast-fashion brands, clothing consumption has increased quickly since 2010, but considering that the average annual growth of fiber consumption is in the 4.3 percent range, it seems that a recovery in the market will take some time.”

While refiners’ petrochemical businesses are watching the clothing industry, their oil exploration businesses are becoming increasingly dependent on better use of big data, especially with the rise of shale gas. Unlike traditional oil fields, shale gas is mixed in the earth’s stratum and its extraction requires the use of highly accurate data.

Industry insiders say global players are already moving ahead with the use of big data.

In the 1990s, American oil giant Chevron managed oil fields by dispatching employees, but now the company is working more efficiently after establishing a data analysis center in Texas in conjunction with Microsoft.

Called a “digital oil field,” the center serves as the brain for a network of oil fields around the world. After exploring geological features in 3D, the company collects information with a sensor-equipped drill. The information is used in exploration and production, and can even detect accidents in advance. Chevron now analyzes 1.5 terabytes of information a day.

China’s BGP has embraced gathering and analyzing big data as its business model. The world’s No. 2 oil exploration company now has more than 150 customers, providing its services to oil conglomerates like BP and Exxon Mobil.

According to a report by IHS CERA, an energy research institute, companies that adopt big data technology increase their productivity by 8 percent and cut costs by 25 percent.

Korean companies, however, remain on the sidelines, citing technology barriers and the massive cost of acquiring oil fields.

SK Innovation just this year became the first private local company to become involved in shale gas exploration in the United States.

The impact of the U.S. shale gas boom has been immense. According to a report by the Bank of Korea, the United States is expected to create 870,000 jobs by 2015 because of the expansion of the shale gas industry. As of 2013, the U.S. accounted for 95 percent of global shale gas production.

“After acquiring oil field operation rights in the United States, we are securing fracking and horizontal drilling technology that incorporates technology,” says Kim Tae-won, who is in charge of the planning division at SK Innovation’s E&P. “We will put our best effort forward to secure technology and workers in the U.S.”

BY KIM HYUN-YE [kjoo@joongang.co.kr]








Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
s
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now