China Petroleum and Chemical Corporation (Sinopec) announced on Wednesday it planned to tie up with SK Energy Co., the biggest oil refiner in the Republic of Korea (ROK), to construct an ethylene project in Wuhan, capital of the central Hubei Province.

The framework agreement was signed by both companies during ROK President Lee Myung-bak's visit to Beijing. The project will be the largest investment the country has made in China.

According to the framework agreement, Sinopec and SK will sign the contract for joint investment this year. SK will hold a 35 percent stake in the project, which has an estimated investment of more than 14 billion yuan.

Preliminary work is being done by both companies and the joint venture will be established after receiving permission from the Chinese government.

Construction of the project launched at the end of last year. When completed in late 2011, the plant will annually produce 800,000 tons of ethylene.

It will also produce key petrochemical products, including 300,000 tons of high-density polyethylene, 300,000 tons of linear low density polyethylene and 400,000 tons of polypropylene.

Both companies also planned to increase investment to enlarge the cooperation to other petrochemical products besides ethylene, Sinopec said.

China's booming economy has boosted its demand for ethylene, a major petrochemical raw material used to make synthetic fiber, synthetic rubber and synthetic plastics.

Listed in Hong Kong, New York, London and Shanghai, Sinopec is China's biggest oil refiner.

(Xinhua News Agency May 29, 2008)