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Japan's JX to form JV with S.Korea's SK Innovation

August 05/2011

(Reuters) -- Japan's JX Nippon Oil & Energy Corp will join forces in petrochemicals and lubricating oils with SK Innovation Co of South Korea, the Nikkei business daily reported.

Faced with flagging demand for gasoline and other petroleum products in their respective home markets, the two giants will invest around 120 billion yen (USD 1.52 billion) in a pair of new production ventures in South Korea, the paper said.

A formal agreement on the business partnership is expected as early as Friday. The new petrochemicals and lubricants factories will be built on the grounds of the South Korean group's refinery complex in the southeastern city of Ulsan. JX Energy will invest more than 50 billion yen in the two ventures, the Nikkei said.

In petrochemicals, the JX Holdings Inc unit will form a 50-50 venture with SK Global Chemical Co, a unit of SK Innovation. Production of paraxylene, an oil-based raw material for synthetic fibers and plastics, is expected to begin around 2014, the business daily said.

At an investment of some 90 billion yen, the new facility will have an annual output capacity of about 1 million tons, making it one of the biggest in the world, the daily reported.

This will bring JX Energy's total paraxylene capacity, now at 2.62 million tons a year, to about 3.1 million tons and raise its share of the Asian market to around 15 percent, cementing its position as the top producer in the region, the paper reported.

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