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South Korean refiner and bunker supplier GS Caltex has announced that it will spend $2.82 billion to create the country's largest refinery by 2010.

GS Caltex will commence construction of its third upgrade unit next month at its plant in Yeosu, South Jeolla Province. The project, when completed will enable the heavy oil upgrading unit (HOU) to produce 113,000 barrels per day, making it the leading refinery in South Korea.

The new HOU, twice the size of the second unit completed last year, will be capable of turning 266,000 barrels of heavy fuel oil into jet fuel and gasoil on a daily basis.

The Yeosu refinery project is said to be part of an ambitous long-term investment strategy by GS Caltex, which aims to create strong growth for the company.

Speaking at a ceremony for the refinery's 41st anniversary, Hur Dong-Soo, CEO of GS Caltex said "Our aggressive investment will maximize the company's profitability, and also offer momentum for the country's economic growth."

GS Caltex is South Korea's second largest refining company with a total refining capacity of 770,000 barrels a day.

In September last year, Hur Dong-Soo announced that GS Caltex would invest $3.19 billion in its third upgrade unit following concerns that the company might shelve the project altogether after a number of refinery project cancellations.

GS Caltex executive vice-president S.H. Chyun had also said in 2006 that the refiner would build its third heavy oil upgrading unit (HOU) in 2009 for $3 billion.

Last year the company finished building its second 55,000 barrels-per-day HOU at the Yeosu refinery, for an investment of $1.6 billion. GS Catex is now scheduled to complete construction of the third upgrade unit by 2010.