S Korea's SK Innovation ratings unaffected by new PX investment

02 May 2012 09:50  [Source: ICIS news]

SINGAPORE (ICIS)--Fitch Ratings said on Wednesday its ratings for South Korean firm SK Innovation will not be immediately affected by the producer’s won (W) 1,600bn ($1.4bn) investment to add new paraxylene (PX) capacity at its Incheon complex.

Fitch has assigned SK Innovation a BBB/Stable rating.

SK Energy, the wholly owned crude oil refining arm of SK Innovation, announced on 30 April that it will upgrade the complex by adding a condensate splitter, a reformer and 1.3m tonnes/year of PX capacity.

Construction of the new facilities will begin this year and they are expected to come on stream by the end of 2014, according to an SK Energy spokesperson.

The spokesperson declined to elaborate on the capacity details of the new condensate splitter and reformer units.

“Although the funding structure for the project has not yet been confirmed, SK Innovation is likely to involve strategic investors to reduce its funding commitment to the project,” Fitch said in a statement.

The “rating headroom” for SK Innovation will be reduced with the investments at Incheon for the next three years, but the firm is expected to manage the impact on the its credit metrics by reducing the cash outlay on this project through the involvement of strategic investors, Fitch said.

SK Innovation, however, will retain majority ownership of the Incheon complex. As the bulk of the investment will take place only in 2013 and 2014, Fitch believes SKI [SK Innovation] will have time to finalise any arrangements with strategic investors,” Fitch added.

The Incheon complex has two crude units, with a total crude refining capacity of 275,000 bbl/day, and has been running at less than 50% of capacity, according to Fitch.

($1 = W1,130)


By: Nurluqman Suratman



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