South Korea’s major oil refiners and petrochemical companies richer through leverage on cheap oil prices will dig into their record earnings of last year to invest around $9 billion to expand capacity.

According to industry sources on Tuesday, the total capital expenditure pledged by local oil refiners and petrochemical firms for this year comes to 9.6 trillion won, but the figure would exceed 10 trillion won ($8.8 billion) when including investment by Lotte Chemical Corp. and Hanwha Total Petrochemical Co. yet to be disclosed.

The combined cash reserves at top eight refining and petrochemical companies - SK Innovation Co., GS Caltex Corp., S-Oil Corp., Hyundai Oilbank Co., Hanwha Total Petrochemical, LG Chem Ltd., Lotte Chemical, and Hanwha Chemical Corp. - reached historic-high of 10.5 trillion won as of December 31, 2016.

The companies will use their wealth for preemptive investment to ramp up capacity and explore new growth engines.

SK Innovation Co., the largest refiner in Korea plans to invest up to 3 trillion won this year. It already purchased U.S.-based Dow Chemical Co.’s ethylene acrylic acid (EAA) business through its affiliate SK Global Chemical Co. at $370 million in February this year. EAA, adhesive resin, is widely used as an adhesive for wrapping aluminum foil and polyolefins, and only a few companies in the world are producing them due to a high technological barrier. Most of its demand has come from advanced markets such as the U.S. and Europe but the company expects the demand would gradually rise from other markets.

The oil refiner is also venturing into other areas like petroleum development and electric vehicle (EV) battery businesses. In a move to actively seek investment opportunities in the petroleum business, it relocated the division’s head office and staffs to Houston, Texas in the U.S. early this year. As for the battery business, it plans to construct two additional EV battery production lines that will increase total EV battery output from the current 1.1-gigawatt hour (GWh) to 3.9GWh capable of powering 140,000 EVs a year.

S-Oil whose largest shareholder is Aramco Overseas Company B.V., a subsidiary of Saudi Arabia’s national oil company Saudi Aramco, has embarked on its plan to invest 3.19 trillion won this year. The company is building a new petrochemical facility that will house residue upgrading complex (RUC) and olefin downstream complex (ODC), which will convert residue oil to high-performance products, propylene oxide and polypropylene used for making automobile parts and construction materials. Currently, SK Chemical is Korea’s dominant supplier of propylene oxide, accounting for half of the country’s demand.

The nation’s top two petrochemical firms LG Chem and Lotte Chemical also have initiated massive investment projects. LG Chem will make an investment of 2.76 trillion won in total this year, up 40 percent from last year’s with an aim to diversify its revenue sources. Park Jin-soo, LG Chem’s vice chairman earlier this month said the company would be spending 900 billion won for upgrading its EV battery business and 800 billion won to nurture basic materials business. Also, the firm has allocated between 150 billion won and 200 billion won for life science research and development projects and 400 billion won for information science projects.

Lotte Chemical has set aside 2.15 trillion won to expand facilities until the first half next year. It will also spend total 3 trillion won in building a shale gas-based ethane cracker in Lousiana, the U.S.

Hanwha Group that acquired chemical units from Samsung Group in 2014 had focused generating synergy effects within the group rather than making an additional investment for expansion last year. But for this year, it has drawn up a plan to expand adhesive production facilities at Hanwha Chemical and spend 539.5 billion won until 2019 to ramp up ethylene production at Daesan plants of Hanwha Total Petrochemical in central Korea.

By Jung Wook

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