SK to Build Second Group III Plant


Conglomerate SK Corp. has announced plans to build a second Group III base oil plant at its oil refinery in Ulsan, South Korea. The $100 million facility, designed to have capacity of 6,000 barrels per day, is scheduled to open during the second half of 2004.

East Asia is renowned for having a glut of base oil capacity and little demand for premium products. But the companys existing Group III supply is selling well in foreign markets, and SK expects demand to grow further by 2005, according to U.S. affiliate Lithcon Petroleum USA Inc.

Its true that theres almost no local demand for base stocks of this quality, Lithcon General Manager Joe Rousmaniere said yesterday. But theyre selling well in the United States and in other export markets. Frankly, the demand has outstripped the companys ability to supply, and that demand should continue to grow. This is strictly an export play.

Lithcon, which is based in Houston and markets SKs base oil in North America, added that SK is also cooperating with other refiners to consider building a third such plant elsewhere in Asia.

The existing plant, which began operating in 1995, has capacity of 8,000 b/d. Rousmaniere said SK decided in August to build the second plant, which will use a similar combination of vacuum distillation and Isodewaxing of fuel hydrocracker bottoms. The Isodewaxing technology will be licensed from Chevron Lummus Global LLC.

Lithcon said SK is currently selling most of its Group III product to motor oil blenders that use it to meet requirements for higher fuel economy and lower emissions levels. Demand for premium stocks has grown rapidly in recent years and SK believes the trend will continue with further upgrades of motor oil standards in North America and Europe.

SK is an industrial powerhouse involved in a wide range of industries, including energy, chemicals, biotechnology and telecommunications. In 2001, it recorded sales of 14.1 trillion Korean won (U.S. $10.6 billion in 2001).

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