Cosmo Oil & Hyundai Oilbank forms JV for Paraxylene business
Cosmo Oil pleased to announce that Cosmo Oil Co., Ltd. and Hyundai Oilbank Co., Ltd. have entered into a Memorandum of Agreement for the establishment of a joint venture company to undertake the paraxylene business in Korea in relation to a previously entered into Memorandum of Understanding,"Strategic Cooperation of Oil Business". Outlined below are the main contents of this MOA.
Main contents of MOA for the establishment of JVC to jointly undertake the paraxylene business
1. Date of MOA: June 9, 2009
2. Signers: COSMO President & Representative, Yaichi Kimura HDO President & CEO, Young-Tae Seo
3. Overview of the JVC
- Planned establishment timing September, 2009 (to be agreed in due course)
- Location Korea (details are to be agreed in due course)
- Initial paid-in capital To be determined
- Investment ratio COSMO 50%, HDO 50%
- Primary business Production and sale of paraxylene and other related products
Size of plants :
a) Existing paraxylene plant using naphtha as feedstock, planned to be transferred from HDO (Located in HDO's Daesan refinery complex, planned to be transferred to the JVC in 2009), Naphtha splitter-55,000BPD, Naphtha desulfurization unit- 24,000BPD, Catalytic reforming unit - 21,500BPD, BTX unit - paraxylene production capacity 380kton/year, Other facilities related to production of paraxylene (e.g. tanks)
b) New paraxylene plant using mixed-xylene as feedstock (To be constructed within HDO's Daesan refinery complex in 2013), BTX unit - paraxylene production capacity 800kton/year, Other facilities related to production of paraxylene (e.g. tanks)
In the "Third Consolidated Medium-Term Management Plan", COSMO positioned the petrochemical business as a growth strategy and have been seeking ways to enhance its business portfolio.
Since signing the MOU in April 2008 on comprehensive oil business cooperation with HDO, a company in which International Petroleum Investment Company (an investment company wholly owned by the government of Abu Dhabi and also COSMO's strategic partner and major shareholder) indirectly has 70% interest, we have been discussing the possibilities for business cooperation, with view to make entry into the paraxylene business.
As COSMO and HDO both expect synergies in expanding the paraxylene business within HDO's refinery complex from effective utilization of COSMO group's mixed-xylene, we agreed to sign this MOA to continue our discussions to establish the JVC to undertake the paraxylene business.
In addition, COSMO also made a decision today that COSMO will build a new mixed-xylene distillation unit within Yokkaichi refinery to create greater synergies between HDO in the paraxylene business. This mixed-xylene distillation unit will also enable COSMO to tackle the decreasing demand in the domestic gasoline market.
*Overview of the new mixed-xylene distillation unit
1. Location: Yokkaichi Refinery
2. Size of the plant : New mixed-xylene distillation unit-300kton/year
3. Planned completion timing : November, 2011
COSMO aims to increase and stabilize its profitability by establishing a consistent operational system from crude oil to paraxylene and balance the demand and supply of gasoline distillates through provision of stable supply of mixed-xylene produced by COSMO group to the JVC.
Cosmo Oil Co Ltd