Sinopec-SK Wuhan Petrochemical, a joint venture between Korea’s SK Global Chemical and China`s Sinopec, has agreed to acquire Wuhan Refinery in Hubei Province from Sinopec for nearly US$2 bln, announced by SK global, as per Pulse News. The deal is due to be closed in the second half of this year,
Sinopec, which owns a 65% stake in the JV, will add 352.6 billion won to maintain current ownership structure. SK Global Chemical Board has decided to shell out 189.8 billion won (US$163.1 million) for the deal. The remainder will be financed through loans, SK Global Chemical said.
The transaction is expected to contribute to stabilizing raw material supply for the JV and creating synergy from an integrated value chain of oil refining and petrochem business in China. Wuhan Refinery founded in 1977 is capable of refining 170,000 barrels of oil a day. It achieved about 350 billion won in operating profit in 2017 and 2018, respectively, and recently upgraded its refining facilities. The company is upscaling its fluid catalytic cracking facilities and aims to finish upgrading other facilities by 2020.
Sinopec-SK Wuhan Petrochemical established in 2013 generated more than 2 trillion won in cumulative operating profit from 2014 to 2018. Since October 2017, the JV has been expanding its facilities to produce 1.1 mln tpa ethylene and become China’s second largest naphtha cracking center by 2020.