S.Korea SK Corp drops joint Vietnam refinery project
Fri Oct 28, 2005
SEOUL, Oct 28 (Reuters) - SK Corp. (003600.KS: Quote, Profile, Research), South Korea's biggest oil refiner, said on Friday it will not go ahead with a plan to jointly build a refinery in Vietnam due to the cost of the investment required. The Korean refiner, which controls nearly a third of the country's oil market, has been studying since early this year the proposal from Vietnam's state oil monopoly, Petrovietnam, to jointly build a new refinery by 2010.
"After a review on the proposal, we came to a conclusion that we cannot afford to make additional investments on refinery projects," SK said in a public disclosure.
The refiner is conducting due diligence on smaller local rival Inchon Oil Refinery Co. Ltd. after it signed a preliminary agreement in September to buy the indebted refiner, which is under court receivership, for 3.2 trillion won ($3.08 billion).
In additiona, SK Corp. is considering investing $2 billion on upgrading its sole refinery to produce more value-added refined products and meet tighter fuel specifications, SK Corp. President and CEO Shin Heon-cheol said in late September.
Vietnam is Asia's sixth-largest producer of crude oil, which is its biggest foreign currency earner, but has to import oil products as it lacks major refineries.
Petrovietnam is looking for $160 million in foreign investment to bridge a shortfall for the $2.95 billion Nghi Son refinery project in the northern province of Thanh Hoa, which it aims to operate in 2010.
Shares of SK Corp. gained 0.19 percent to close at 52,000 won, versus a 2.2 percent fall in the benchmark stock index.
($1=1039.0 Won)
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