* Wutan Petrochemical has decided on a KRW 740 billion investment to expand its production by 40% (3 million ton per year)
* SK Global Chemical will expand its strategic partnerships in China to facilitate its growth in the Chinese chemical market.
SK Innovation has revealed that Wutan Petrochemical, a joint venture
between the SK Innovation subsidiary, SK Global Chemical and China’s largest
oil company Sinopec, has decided to commit a KRW 740 billion investment to
increase its production by 40%.
* This investment is an internal investment from
profits generated by Wutan Petrochemical and is not a direct investment from
its shareholders, SK Global Chemical and Sinopec
With this expansion, Wutan Petrochemical will provide an increased
production yield per year, adding 0.8 million tons to its annual production and
increasing its annual production to 1.1 million, 0.9 million, 0.7 million for
ethylene, polyethylene, polypropylene, respectively. The total annual
production of Wutan Petrochemical is expected to increase and reach the 3-million-ton
mark. The expansion is slated to be completed by 2020, and will immediately work
toward mass production after the completion.
With the Chinese production of ethylene and its derivatives expected to
remain at about 60% by 2020, Wutan Petrochemical’s expansion is interpreted as
a strategic decision to acquire a basis for preemptive marketing.
The expansion will be in the form of a revamp, in which existing production
facilities are improved, modified, or streamlined instead of creating a new
production facility altogether. Revamps tend to be more cost-efficient than new
construction, and the new investment plan will likewise offer an additional
production of 0.8 million tons, with only 60% of the costs of new construction.
Wutan Petrochemical, the most successful global partnership undertaken by
SK Innovation, was established in October 2013, with the joint investment of KRW
3 trillion 300 billion from SK Global Chemical and Sinopec in a 35:65 ratio. It
is the largest petrochemical joint venture since the opening of diplomatic
relations between Korea and China. It has accumulated a steady success trend,
generating a surplus from the very first year.
On top of that, Wutan Petrochemical is often cited as one of the most
successful examples of a joint venture in China, with highuation across
the fields of management, productivity, efficiency, and safety. It has also
contributed greatly to the Chinese national economy and the regional economy of
Hubei Province. As the largest petrochemical companyd in Hubei Province,
Wutan Petrochemical is the largest contributor of tax revenue to the provincial
SK Global Chemical has focused on developing new business opportunities and
generating further growth drivers in China, with the goal of growing as a
prominent chemical marketing company in the Chinese market. The most important
component of this venture is its partnership with Sinopec. As such, SK Global
Chemical has focused its efforts on working out the mutually beneficial
arrangements that utilize the resources of the two parties in the most optimal
CEO Jun Kim of SK Innovation commented: “The investment by Wutan
Petrochemical was only made possible with a strong, unified will toward mutual
growth and trust between SK and Sinopec.”