SK, JX lube base oil plant joint venture nearing 80% utilization

The joint venture lube base oil (LBO) plant between Japan’s JX Nippon Oil & Energy Corp., a unit of JX Holdings Inc., and South Korea’s SK Lubricants Co., a subsidiary of SK Innovation Co., which has recently started production, is reaching near 80% utilization.
The #3 LBO plant, which has a capacity to produce 26,000 barrels per day (bpd) of Group III base oil, is located in the SK Energy Ulsan Complex. SK owns 72% of the JV, while JX owns 28%.
The JV is part of a 1.35 trillion won (US$1.2 billion) joint venture agreement between JX Nippon Oil and SK Innovation subsidiaries announced last year. The larger portion, about 1 trillion won (US$850 million) was for a 50-50 paraxylene JV with an annual production capacity of 1 million tons. Commercial production is expected to start in 2014.
The recent completion of the #3 LBO plant should result in a 50% net increase in SK’s Group III capacity, taking into account the shutdown of the #1 LBO plant. The #1 LBO plant, with a capacity of 12,300 bpd is to be converted into a Group II plant sometime in the first quarter of 2013.
SK is estimated to produce about 40% of the global supply of Group III.