SK Group signed an MOU with British Petroleum (BP) and SINOPEC to build a petrochemical plant complex producing butanediol, ammonia, and acid in Chongqing, China, on Feb. 22 at the Chongqing Hilton Hotel, the group said recently.

The plant complex, to be built by 2014 at a cost of 1.2 trillion won, will be the largest such complex in China. It will produce 200,000 tons of BDO, 600,000 tons of acid, and 250,000 tons of ammonia annually when it goes online in 2014. 

Present at the signing included Chairman Chey Tae-won of SK Group, Chairman Wang Tianpu of SINOPEC, and CEO Nick Elmslie of BP Petrochemical, among others. SK and SINOPEC are partners in the BDO production business, while BP and SINOPEC will jointly undertake the acid production project. SINOPEC will take on the ammonia plant project on its own.

Chairman Chey said SK Group will push the project as a global conglomerate with revolutionary ideas to ensure its success and follow it up with many more successful projects in China. He said he expects many win-win deals with SK’ s partners in the future based on trust and cooperation.

The complex is projected to yield some 2 billion yuan in annual profit after it goes into operation. Construction of the plant complex will kick off in July.

SK and its Chinese partner will jointly invest 660 billion won on 50-50 basis. The plant is the third such project the two partners have undertaken in China thus far. In 2004, SK and SINOPEC jointly built a solution plant in Shanghai capable of producing 60,000 tons of the petrochemical product annually. The two partners are currently seeking approval from the authorities for a JV plant for the production of 800,000 tons of ethylene annually in Wuhan, China, a project that resulted from Chairman Chey’ s visit to China at the end of last year to meet with CEO Wang to sign an MOU on the joint construction and technology exchange in connection with the new project.

Globalization of the lube base oil business, which was led by Chairman Chey, bore fruit once again. 

Chey, who expanded the lube base oil business into a global business by completing the Indonesia lube base oil refinery in 2008, succeeded in further expanding into Europe. 

According to SK, Chairman Chey, President of SK G&G Promotion Team Yoo Jung-jun, and SK Lubricants CEO Choi Kwan-ho had a meeting with Chairman Antonio Brufau Niubo at the Repsol headquarters in Madrid, Spain, on Nov. 4, 2011. They agreed to cooperate in various fields including the construction of a joint group III lube base oil refinery in Cartagena, on the southeast coast of Spain. 

After Chairman Chey had requested to develop various global growth models based on ‘Partnering’  at the CEO seminar, the first achievement was made in the lube base oil business. This shows Chey’ s strong will to lead in the lube base oil business. 

The joint refinery in Spain will be completed in 2014 with a capacity of 12,000 bpd and will act as an outpost for the European lubricants market. 

Considering the fact that Europe consumes 40 percent of the world’ s group III lube base oil, SK is expecting SK Lubricants’  Spain joint refinery to work as a steppingstone for SK’s market share increase.