A power outage at a major petrochemical complex in South Korea forced two of the country’s largest chemical companies to shut down their plants, adding to their woes amid a prolonged industry slump.
At approximately 9:25 a.m. on Feb. 25, a power outage occurred at LG Chem and Lotte Chemical plants located in the Daesan Petrochemical Complex in Seosan, Chungcheongnam-do (Province), leading to a complete halt in operations at both facilities.
While power supply resumed around noon after a phased recovery starting at 10:40 a.m., normalizing plant operations is expected to take several days, with massive losses anticipated. For these companies, which have been experiencing deficits due to a prolonged petrochemical downturn, the plant shutdown adds to their challenges.
Typically, petrochemical plants produce materials by heating and cooling substances like petroleum in a continuous process. Even a short power outage can cause materials in the pipelines to harden, making a steady power supply crucial.
For this reason, even though power was restored after the 80-minute outage, the companies need more time to restart operations. On the day of the incident, both companies burned off all input materials and completely shut down the plants. They now have to thoroughly inspect the facilities to make sure no leftover materials will interfere with future production.
A relief for the companies is that the affected plants were already operating at minimal capacity due to the recent petrochemical slump and had sufficient inventory, so customer supply remains unaffected. However, shutdown and maintenance costs still pose significant financial losses.
Since determining the cause of the outage and liability for damages could lead to complex disputes, attention is turning to why only LG Chem and Lotte Chemical plants were affected.
The Daesan Petrochemical Complex, one of S. Korea’s three major petrochemical hubs alongside Ulsan and Yeosu, houses about 50 petrochemical companies. Yet, the outage was limited to these two plants. This is because both companies jointly operate the facilities, having acquired them from Hyundai Petrochemical, and share a power grid.
The power grid, managed by SEETECH, a joint venture equally owned by LG Chem and Lotte Chemical, is a primary suspect for the outage. SEETECH receives electricity from CGN Daesan Power, a subsidiary of China’s state-owned China General Nuclear Power Group.
Similarly, in 2006, following a similar outage that halted plant operations, LG Chem and two other companies filed a 10.4 billion won lawsuit against Korea Electric Power Corporation (KEPCO) for damages. This time, the situation appears more intricate.
“Since KEPCO supplies electricity to SEETEC, which then distributes it to each company, the issue doesn’t seem to be with KEPCO’s transmission lines,” a KEPCO representative said.
