SK Innovation Co., South Korea’s leading oil refiner, said on Tuesday a joint venture between its affiliate SK Global Chemical Co. and China’s Sinopec Corp. has decided to invest 740 billion won ($653.8 million) in boosting production capacity of petrochemical goods to meet burgeoning demand in China.

In 2013, the affiliate SK Global Chemical and Sinopec invested 3.3 trillion won to form Sinopec-SK Wuhan Petrochemical joint venture, with SK Global Chemical holding a 35 percent stake.

The latest investment is expected to boost annual capacity of the joint venture’s factory in China by 36.4 percent to 3 million tons. Ethylene and polyethylene production would increase to 1.1 million tons and 0.9 million tons, respectively, and polypropylene 0.7 million tons.

The joint venture aims to complete the revamping process by 2020.

“China is expected to reach only a 60 percent level of self-sufficiency in petrochemical products even by 2020,” said an official from SK Innovation. “This move would allow us to gain an early lead in the market.”

The revamp generally consists of replacing old parts and eliminating inefficiencies, which would be 60 percent the cost of building new facilities.

By Hwang Hyung-gyu and Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]