SK Group and Sinopec are seeking to expand their areas of cooperation in China to extend to their petroleum, base oil and lubricant businesses, the South Korean conglomerate said Friday.
SK Innovation, SKs petrochemical arm, made the announcement after SK Chairman Chey Tae-won and Sinopec Chairman Wang Yupu met in Beijing. Sinopec expressed deep interests in SK Innovations know-how in the management of refinery and petrochemical plants and cooperation in technologies relevant to safety and environment, the company said in a statement.
SK previously signaled its interest to expand its presence in Chinas lubricant market, which is one of the worlds two largest. SK Lubricants already sells finished lubes in China, and it made an unsuccessful bid last year to buy Royal Dutch Shells 75-percent stake in Tongyi Lubricants, a large player in the countrys automotive lube market.
Sinopec and PetroChina - both state-owned energy giants - are the two largest finished lubricant suppliers in China.
SKs desire to expand in China extends beyond its lubricant business. The company previously disclosed a strategy, dubbed China Insider, to make that country a second base after its home market. It already partners with Sinopec in a joint venture petrochemical refinery that opened in Wuhan, China, in 2014.
Cooperation in lubricants need not necessarily involve finished lubricants from SK. The South Korean refiner is the worlds largest supplier of highly refined API Group III base stocks, which are used to make high-performance lubricants, including synthetic automotive engine oils. Until now, the base oil business of SK Lubricants has focused largely on the European and North American markets, where Group III is in large demand because of the high degree of penetration of synthetic lubes. Synthetic lubricant demand in China has been relatively low, but the quality of the Chinese market is rising rapidly as air emissions standards rise and the number of new vehicles grows.