SK Energy, the largest refiner in South Korea, announced that the company completed its third lubricant base oil (LBO) plant in Dumai, Indonesia. Over 400 guests and SK Energy's executives, which include Heon Cheol Shin, Vice Chairman & CEO of SK Energy, Jeong Joon Yu, President of SK Energy's Resource & Chemical Business, Sofyan Djalil, Minister of State Enterprise in Indonesia, and Ari Sumarno, President of Pertamina, attended the commercial operation celebration of the new plant in Dumai, Indonesia on July 15.

The new LBO plant will produce Group III base oil, the raw material of lubricant, with daily production capacity of 7,500 barrels.

SK Energy currently produces 21,000 barrels of base oil per day at its first and second LBO plants in Ulsan Complex, Korea. With the additional production at the new LBO plant, SK Energy will solidify its prominent leadership in high quality lubricant base oil market (Group III).

SK Energy initially signed a joint venture agreement to establish the new LBO plant with Pertamina in April, 2006, which was followed by commencement of construction in November, 2006. The new plant had its mechanical completion in March of this year, which was approximately two months ahead of its schedule.

Vice Chairman Shin said, "The new LBO plant will serve as a strong foundation of more comprehensive cooperation between SK Energy and Pertamina in the future. We will strengthen our ties in various business areas such as joint projects in resource development, increase in trade, exchange of technology and technical information, engineer education, supply channel development, new business development." He added, "SK Energy will further strengthen its 'Southeast Asian Triangle,' which connects the logistics base in Singapore, the resource development project in Vietnam, and the new LBO plant in Indonesia, to stay ahead of competition."

SK Energy initially made inroads into higher quality lubricant base oil market in 1995 by completing its first LBO plant in Korea. The company now exports its base oil products to over 200 companies in 50 countries, including major international petroleum companies.

Lubricant base oil is basic oil ingredient (raw material) of lubricant, which includes lubricant for engine and industrial purpose, and grease. Generally, Lubricant is made of lubricant base oil (80~99%) and the additives (1~20%).

Lubricant base oil is categorized into 5 groups - Group 1, 2, 3, 4 and 5. Comparing to Group 1 and 2 which accounts for the most of regular lubricant base oil, Group 3 lubricant base oil is a high quality product with high viscosity index level. Group 4 and 5 are chemical products such as polyalpha olefin.