SK Lubricant will build a lubricant base oil plant in Spain in collaboration with the Spanish oil firm Repsol YPF, SK Group announced Monday.

According to the conglomerate, an SK Group delegation led by chairman Chey Tae-won met with Repsol chairman Antonio Brufau Niubo in Madrid on Friday and signed a letter of intent to build a base oil plant and to collaborate in other areas.

Aside from the plant, the SK Group and Repsol officials also agreed to seek opportunities for collaboration in other related areas including oil exploration and liquefied natural gas businesses.

The lubricant base oil plant, which will be located within Repsol’s refinery in Cartagena in southern Spain, will have an annual production capacity of 12,000 barrels. The facility is scheduled for completion in 2014, SK Group said.

The Korean firm said that the project will allow it to increase its market share in Europe and further improve SK Lubricant’s performance.

According to SK Group, its lubricant business’s sales increased nearly six times since 2001 to come in at over 2 trillion won ($1.8 billion) last year. With the business expanding rapidly, SK Lubricant was established in late 2009 to focus on related businesses.

By Choi He-suk (cheesuk@heraldcorp.com)