S.Korea E1 considers new LPG tanks for petchems

SEOUL, April 15 (Reuters) - South Korean liquefied petroleum gas (LPG) supplier E1 said on Wednesday it was considering building a LPG storage facility at a major petrochemical complex in Daesan, south of Seoul, to meet rising demand from naphtha cracker operators.

Petrochemical firms can switch to LPG when prices of the conventional feedstock naphtha are high. Compared to volatile naphtha prices, which move directly in line with crude oil, LPG prices are relatively stable.

"LG Chem and Honam Petrochem have requested more LPG supplies. In order to meet this demand, we are considering building a 60,000 tonne storage facility," said Kwon Dong-chul, a spokesman for E1 (017940.KS).

"We have already requested a design blueprint for the storage complex from GS Engineering & Construction (006360.KS), and once we get that at the end of the month, we will make a decision."

E1 and SK Gas (018670.KS) are the only LPG importers in South Korea. Most supplies come from Saudi Arabia and Qatar.

E1 said the required investment for the facility had yet to be determined but that considering its capacity it was likely to cost more than a similar complex being built by Samsung Total.

Samsung Total, which uses the largest portion of LPG, is currently building a 40,000 tonne capacity LPG tank in Daesan. The 600 billion won ($448.3 million) facility is part of the firm's plan to directly import LPG from the Middle East.

LG Chem (051910.KS), which has two naphtha operating units -- a 880,000 tonnes per year (tpy) unit in Yosu and another of 760,000 tpy in Daesan, both south of Seoul -- uses LPG for about 10-15 percent of its feedstock. It plans to gradually increase the ratio to about 20-25 percent, naphtha traders have said.

SK Energy (096770.KS), which buys all of its LPG from SK Gas, uses LPG for about 10 percent of its feedstock. (Reporting by Angela Moon; Editing by Jonathan Hopfner)