Insight

Why did Sinopec-SK Wuhan Petrochemical buy the Wuhan refinery?

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10 September 2019

Why did Sinopec-SK Wuhan Petrochemical buy the Wuhan refinery?

Report summary

Sinopec-SK Wuhan Petrochemical, a joint venture between South Korea’s SK Global Chemical and China’s Sinopec has agreed to buy the Wuhan refinery, Hubei province, from Sinopec for W2.2 trillion (US$1.9 billion). Sinopec will pay W352.6 billion (US$ 296 million) while SK Global Chemical will contribute W189.8 billion (US$159 million) reflecting the joint-venture’s 65:35% ownership structure. The remaining W1.66 trillion (US$1.4 billion) will be debt-financed. The joint-venture, established in October 2013, already owns the adjacent 800 ktpa steam cracker and plans to increase the ethylene capacity by 300 ktpa during 2020. This Insight will examine the competitive position of the independent sites and the value added through integration.

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    Wuhan Insight_final_Sept2019.pdf

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