Sector News

SK Innovation/Sinopec JV acquires Sinopec refinery at Wuhan, China for $2 billion

April 30, 2019
Chemical Value Chain

Sinopec-SK Wuhan Petrochemical Co. (Wuhan, China), a joint venture (JV) between Sinopec and SK Global Chemical (Seoul, South Korea), a subsidiary of SK Innovation, has agreed to buy the Sinopec-owned 170,000-b/d Wuhan refinery in Hubei Province, China, for about 2.2 trillion South Korean won ($1.9 billion).

Under the deal, Sinopec will invest W352.6 billion and SK Global Chemical will pay W189.8 billion to establish 65/35 JV ownership of the facility. The rest will be financed through borrowings.

SK Innovation says that the deal will allow it to secure feedstocks to make petrochemical products and integrate refining and petchem operations at Wuhan. SK Innovation says that the transaction marks the first time a South Korean company has taken a direct ownership stake in a refinery in China.

According to Sinopec, the Wuhan refinery manufactures 25 products including gasoline, kerosene, jet aviation fuel oil, light diesel, naphtha, solvent oil, naphthenic acid, methyl tert-butyl ether (MTBE), special heavy oil, fuel oil, industrial flake sulfur, petroleum coke, polypropylene (PP), benzene, toluene, para-xylene, and LPG. Products are sold across more than a dozen provinces and cities in China including Hubei, Hunan, Sichuan, and Chongqing.

Sinopec-SK Wuhan Petrochemical operates an adjacent petchem complex with an ethylene capacity of 800,000 metric tons/year. It intends to increase ethylene production to 1.1 million metric tons/year by 2021. Sinopec-SK Wuhan in 2017 approved the debottlenecking plan.

The project also involves expanding the Wuhan petchem complex’s downstream plants and constructing three new derivative units. The three new plants will be a 300,000-metric tons/year high-density polyethylene (HDPE) facility, a 300,000-metric tons/year PP facility, and a 60,000-metric tons/year butadiene extraction unit.

The capacities of the complex’s existing MTBE and butene-1 facilities will be increased from 80,000 and 30,000 metric tons/year to 120,000 and 45,000 metric tons/year, respectively. The petchem complex also produces triethylene glycol, with a capacity of 3,000 metric tons/year; ethylene glycol (EG), 300,000 metric tons/year; diethylene glycol, 27,000 metric tons/year; and ethylene oxide (EO), 360,000 metric tons/year.

By Kartik Kohli

Source: Chemical Week

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