Sinopec Sichuan Vinylon Works Group and the Republic of Korea's SK Chemicals Co Ltd signed a joint venture contract on Monday in Chongqing Municipality to build a butanediol (BDO) facility with an annual production volume of 200,000 tons.

The project, which includes production facilities for acetylene, formaldehyde and BDO, as well as other support projects, will cost 3.8 billion yuan ($605 million).

Located in the Changshou Economic-Technological Development Area, the project is expected to be completed by the end of 2015. Upon completion, it is expected to see an annual sales volume of 4 billion yuan and pay 1.4 billion yuan in taxes each year.

The BDO project is a milestone for Chongqing in becoming a global natural gas industrial base, Mayor of Chongqing Huang Qifan said at the signing ceremony.

The petrochemical industry, especially the natural gas chemical industry, is one of the six pillar industries in Chongqing. The industry's output value reached 200 billion yuan in 2012 and is expected to reach 500 billion yuan in 2015.

Sinopec is China's top oil refiner. SK is the third largest conglomerate in the Republic of Korea, with energy and communications as its two major businesses.