SK Innovation, the holding company of SK Group’s energy sector, announced on Monday the start of commercial operations of its lubricant production plant in Cartagena, Spain, as part of the company’s aim toward globalization.
“With the production line in Spain, SK Lubricants has become the world’s third-largest lubricant oil producer behind Exxon Mobil and Shell, with an expanded daily output of 70,800 barrels,” SK Innovation said in a press release. “The joint investment in Spain is helping SK Lubricants drive up globalization of its key product.”
The Spanish facility was the result of a joint partnership between SK Lubricants ― a sister firm of SK Innovation ― and Spain-based Repsol.
SK Lubricants holds a 70 percent stake in the joint venture with an investment of 470 billion won ($439 million), and is responsible for providing the technology for lubricant production, along with a global marketing network.
An aerial view of the SK Innovationinvested lubricant plant in Cartagena, Spain (SK Innovation)
Repsol, which owns the remaining 30 percent, supplies the materials and infrastructure for production.
Besides the production line in Spain, SK Lubricants runs a lubricant oil plant in Korea and in Indonesia.
On the group level, SK Innovation is pushing its moneymaking lubricants oil business to offset the declining profit in SK’s refinery business led by affiliate SK Energy.
South Korean oil refiners, including SK Energy, have recently been struggling to overcome worsening profit margins paired with global oversupply. SK Innovation posted an operating loss of 50.3 billion won in the second quarter.
In contrast with the money-losing refinery business, the lubricants sector has seen significant growth over the past few years in line with the continued rising demand from the auto industry.
Market watchers said major oil refiners are expected to further capitalize on the lubricants sector.
At home, competition in the lucrative lubricant oil business is therefore likely to get fiercer, they added.
As of September, GS Caltex held the biggest market share of 17 percent in the 2.5 trillion won lubricant market, followed by SK Lubricants (16 percent) and Saudi Aramco-invested S-Oil (12 percent).
By Seo Jee-yeon (
jyseo@heraldcorp.com)
