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SK Energy, China Petroleum: Preliminary Agreement

SK Energy Co., South Korea's biggest refiner, said Wednesday it has clinched a preliminary deal with China Petroleum & Chemical Corp. to form a joint venture to build a naphtha cracking center in central China

SK Energy Co., South Korea's biggest refiner, said Wednesday it has clinched a preliminary deal with China Petroleum & Chemical Corp. to form a joint venture to build a naphtha cracking center in central China.

The facility capable of producing 800,000 tons of ethylene annually will be built in Wuhan, Hubei Province, SK Energy said in a statement.

The two companies plan to sign a formal contract for the establishment of the joint venture by the end of this year and SK Energy will hold a 35-percent stake in the venture, SK Energy said.

The naphtha cracking center will begin operations by the end of 2011, it added.
The plant will also produce key petrochemical products including 300,000 tons of high density polyethylene, 300,000 tons of linear low density polyethylene and 400,000 tons of polypropylene, the company said.

Chey Tae-won, chairman of the refiner, attended the ground-breaking ceremony for the plant held on December 18 last year at the invitation of China Petroleum.

Ethylene, a colorless flammable gas derived from natural gas and petroleum, is used as a source for many organic compounds.