SK Innovation and JX Nippon Oil & Energy on Friday announced a joint venture to invest 350 billion South Korean won (U.S. $325 million) to build an API Group III base oil plant at SKs Ulsan, South Korea complex, with commercial production expected by July 2012.
According to a statement at JX Nippon Oils web site, the investment ratio is 72 percent by SK and 28 percent by JX. The new joint venture plant in Ulsan is expected to have base oil production capacity of about 1.35 million kiloliters per year, JX said.
The joint venture will produce 1.13 million metric tons per year, Jason Shim, a senior manager for SK Lubricants base oil marketing team, told Lube Report. Shim explained that 550,000 metric tons per year of Group III base oil will be produced and the rest of it, the capacity of 580,000 metric tons per year, will be used for manufacturing other grades of base oil, but Group III products after 2013.
In terms of the percentage of base oil output each partner will take, Shim confirmed its a different split on the output. We do not want to release the exact figures.
Seoul-based SK confirmed to Lube Report that the plant described in Fridays announcement is the same one discussed by company officials at the ICIS Asian Base Oils & Lubricants Conference in Seoul June 14. At the conference, SK Lubricants CEO and President Kwan Ho Choi said the company was currently building an 11,000 barrels per day Group III plant located in Asia. SK had declined in June to reveal the new plants specific location or whether it was a joint venture.
SK Lubricants existing base oil refinery in Ulsan, South Korea, has 4,000 b/d Group II and 17,000 b/d of Group III capacity.
In June 2010, SK Lubricants announced plans to partner with Repsol YPF to build a new 13,000 b/d Group II/III base oil plant at Repsols Cartagena, Spain, refinery. It is scheduled to begin production in 2014.
The SK-Pertamina joint venture in Dumai, Indonesia, which is 65 percent owned by SK, has about 7,000 b/d of Group III capacity. It began production in 2008.
JX Nippon Oil of Tokyo has three base oil plants in Japan, with 11,900 b/d of Group I and 400 b/d of Group III capacity.
The joint venture partners also announced plans Friday to invest 1 trillion won to build a paraxylene plant in Ulsan with annual production capacity of 1 million tons per year.