SK Corp. announced Sunday that it has signed an agreement to build a Group III base oil plant in Indonesia with national oil company Pertamina. The $175 million plant will be designed to make 7,250 barrels per day and is scheduled to come online during the first half of 2008.
Reports about the project first surfaced in November, but SK said then that negotiations were still underway and that a final agreement had not been reached. An Indonesian news agency at that time reported the projects capacity at 6,800 b/d and said it was slated to open in 2007.
In Sundays announcement, SK President and Chief Executive Officer Shin Heon-Cheol said the company wanted to keep its position as the worlds biggest Group III producer. SKs existing plant in Ulsan, South Korea, is undergoing a maintenance turnaround and expansion aimed at raising its Group III capacity to 15,800 b/d (and its overall capacity to 19,700 b/d). S-Oil Corp. is the worlds second-largest Group III producer, with 9,000 b/d of capacity at its plant in Onsan, South Korea.
SK Corporation will maintain its leadership in the global Group III market with this agreement, Shin said.
Pertamina did not post a news release and officials with the company could not be reached for comment yesterday.
SK and Pertamina will share equally in the cost and ownership of the project, an SK spokesman said. Their agreement calls for Pertamina to be responsible for marketing oils from the plant in Indonesia while SK will take charge of those sold elsewhere.
The new plant will be built at a Pertamina refinery in Dumai, on the central northern coast of Sumatra. Pertamina operates an existing base oil plant at another refinery in Cilacap, on Java. It has capacity to make 8,600 b/d of Group I oils.