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Japanese refiners compete to invest in Korean petrochemical industry

affected by the weakness of the domestic oil and petrochemical market, Japanese enterprises and Korean refiners are strengthening business cooperation and building joint ventures in South Korea to make use of South Korea's export competitive advantage to make up for the lack of domestic market demand

analysts said that South Korea has become an attractive export base in Asia and even the world due to low power costs, weak won trend and more favorable corporate taxes

JX, the largest oil refiner in Japan, and SK innovation company, the largest oil refiner in South Korea, jointly announced on August 4 that the two sides will cooperate in the fields of petrochemical and lubricating oil business. The two giants will invest about 120billion yen to establish two new joint ventures in South Korea, and the new petrochemical and lubricating oil plants will be built in the refining consortium of SK innovation company in Ulsan. JX Japan Petroleum Energy Company will invest more than 50billion yen in the two joint ventures

in the petrochemical joint venture, JX Japan Petroleum Energy Company will establish a joint venture with SK global chemical company, a subsidiary of SK innovation, with a total investment of about 90billion yen. It will mainly produce paraxylene, with a design annual capacity of 1million tons. It is expected to be put into production in 2014. At that time, JX Japan Petroleum Energy Company's annual production capacity of paraxylene will be increased from the current 2.62 million tons to about 3.1 million tons, and its share in the Asian market will rise to about 15%, so as to further consolidate its position as the largest producer of paraxylene in Asia with stable and reliable pressurization system of the experimental machine

in addition, JX Nippon Oil and energy will also establish a joint venture with SK innovation's lubricant subsidiary, with the Japanese company holding 30% of the shares. The joint venture will invest about 30billion yen to build a production plant. It is expected to start production in 2012, with an annual output of about 1.3 billion liters of lubricant base oil, which is mainly supplied to lubricant blending manufacturers in Japan, South Korea and other parts of Asia

in addition to the cooperation between the two oil refining giants, in July this year, Korean refiner Hyundai refining company and Japanese Cosmo oil company announced that they would jointly invest 600billion won (about 566million US dollars) to expand the existing production capacity of benzene, toluene and xylene (BTX) in Dashan, South Korea, in order to improve the export capacity of benzene, toluene and xylene mixed products. Modern oil refining company recently said in an announcement that the No. 1 BTX unit of the two companies' experimental power limited company can currently produce 500000 tons of paraxylene and benzene products per year. After the completion of the capacity expansion project, the company's annual BTX capacity will reach 1.5 million tons. The capacity expansion plan is expected to be completed in June 2013, when all benzene and p-xylene products from BTX unit 2 will be exported to Chinese Mainland, Taiwan, China, Europe and other places. Hyundai refining company said: "Cosmo oil company will provide xylene to BTX unit 2, so we are less affected by the fluctuation of international raw material prices. This sudden value is used to judge the plastic deformation performance of materials."

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