SK launches Korea-China joint ‘Wuhan project’ through 7-year effort

SK Group has completed a joint venture project with Sinopec, China’s largest state-run oil company, to construct a petrochemical plant in Wuhan City, Hubei Province, after seven years of work.

 

SK Innovation said that its subsidiary SK Global Chemical signed a contract with Sinopec at Diaowitai State Guesthouse on Friday to establish a ‘Wuhan ethylene joint venture company.’ SK Global Chemical holds 35 percent stake in the new undertaking and Sinopec taking 65 percent. The plant involved investment of 3.3 trillion won (2.9 billion U.S. dollars) in total, the largest ever in value among petrochemical joint venture projects between Korea and China.

 

In April 2006, SK Global Chemical started considering a plan to participate in a project to construct a petrochemical plant in Wuhan. The company officially applied for its participation in the joint venture project in May 2011, and received final approval last month. In the course of this initiative, a plant has been constructed first. Sinopec recently completed a plant equipped with a naphtha cracking center at 2.94 million sq. meter property in Wuhan City.

 

The two companies have set aside a paid-in capital of 1.18 trillion won (1.04 billion dollars) for the new joint venture. Of the 3.3 trillion won (2.9 billion U.S. dollars) invested to construct the plant, the remaining 2.12 trillion won (1.86 billion dollars) has been borrowed through loans, and the two companies agreed to take charge of the debts in proportion to their stakes in the new company.

 

The Wuhan plant will start commercial operation as early as end July, and will produce petrochemical products amounting to a combined total of 2.5 million tons per year, including 800,000 tons of ethylene, 600,000 tons polyethylene, and 400,000 tons of polypropylene.