SK joint venture to acquire Chinese oil refinery plant

Sinopec-SK Wuhan Petrochemical, a joint venture between SK Group and China’s largest state-run petroleum group Sinopec, is acquiring a refinery in Wuhan, according to SK Group on Monday.

SK Global Chemical held a board of directors’ meeting on Monday and decided how to fund 187 billion won necessary to acquire Wuhan Refinery. The overall cost of the transaction amounts to 2.183 trillion won, with Sinopec funding 346.8 billion won according to its 65 percent stake in the joint venture and the rest will be covered by outside funding.

“This acquisition deal has been offered by Sinopec in appreciation of SK’s ability in process operation, and safety, health, and environment management,” SK Global Chemical said. The Wuhan refinery started operation in 1977 and is capable of refining 170,000 barrels of oil a day.

SK became the first Korean company to operate a Chinese petrochemical company through a joint venture it established in 2013. With the recent deal, the South Korean company will be operating a refinery as well. Industry watchers say SK Group Chairman Chey Tae-won’s “China Insider” strategy is finally gaining a momentum.

Sinopec-SK Wuhan Petrochemical has achieved over two trillion won in accumulated operating profit only in five years since the company began its operation, becoming SK Group’s best practice in its global investments.

The SK chairman has actively led the joint venture project since 2006, while meeting with Chinese leadership such as Hubei Province party secretary and Sinopec CEO. Chey met with Sinopec executives in the BOAO Forum for Asia in March and vowed to strength their cooperation on the project.


Tae-Ho Hwang taeho@donga.com