A new Japanese/South Korean joint venture is set to boost Group III base oil production.
The venture, between JX Nippon Oil and Energy Corp and SK Innovation Co, focuses on two plants to be built on SK's existing refinery complex in Ulsan, South eastern South Korea. The new factories will produce API Group III base oil and Paraxylene - an oil-based raw material used in the manufacture of plastics.
The deal will see the two organisations invest some ¥120bn ($1.52bn) in the new operations on a 50-50 basis through subsidiary companies JX Holdings and SK Global Chemical, although the base oil operation will be on a 72-28% investment ratio with an expectation of producing 1.35m kilolitres of Group III product annually.
Production is expected to begin in the summer of 2012, with the plant also producing other grades of base oil. The existing refinery has a 4,000b/d Group II and 17,000b/d Group III capacity. The Paraxylene operation will create a 1 million ton capacity, making it one of the largest plants of its kind in the world.
The joint venture is aimed at boosting lubes and petrochemical demand in both the organisations' home markets, particularly for JX Nippon Oil which has faced a continued market decline in Japan since 2003.