* Q4 operating loss narrows to 47 bln won

* Refining arm posts profit; batteries segment hit by rising costs

* Some 70% of 2022 capex of at least $5 bln to go to batteries

SEOUL, Jan 28 (Reuters) - South Korean energy group SK Innovation Co Ltd reported a narrower fourth-quarter loss on Friday as refining margins improved in its oil business, helping offset a steep cost increase involving its new battery plant in China.

The owner of South Korea's top refiner, SK Energy, said it expects its refining margin to stay stable this year, as both demand and supply are seen increasing amid global economic recovery.

SK said batteries, its biggest new growth area, will be the focus of around 70% of its capital expenditure - around $5-5.4 billion - this year as it competes in an intensifying global race to boost capacity to supply the booming electric vehicle (EV) market.

The company posted an operating loss of 47 billion won ($39 million) in the October-December quarter, narrowing significantly from an operating loss of 199 billion won in the same period a year earlier.

Its refining business swung to a profit of 221.8 billion won. But losses at its battery business almost tripled to 309.8 billion won, mainly due to fixed costs involving its new battery plant in China that began mass production last year.

It has several new battery plants under construction, in Hungary, China and the United States, as it prepares to increase supply to EV manufacturers.

The battery business saw revenue more than double to 1.07 trillion won. SK's total revenue jumped 76% to 13.7 trillion won from a year earlier, just below the average 13.8 trillion won forecast of analysts according to Refinitiv SmartEstimate.

Analysts noted that the surge in prices of certain raw materials used in manufacturing batteries, as well as weak battery demand from automakers hit by a global chip shortage, had also impact on the company's results.

Its battery unit, SK On, counts Ford Motor Co and Kia among its customers. It aims to reach break-even in the fourth quarter this year and achieve middle single-digit operating profit margins by around 2025.

SK Innovation, which has a total refining capacity of 1.115 million barrels per day (bpd) at plants in Ulsan and Incheon, said it operated facilities at 68% of capacity on average in the quarter, up from 61% a year ago.

"Starting the first quarter this year, we have been operating our CDU (crude utility unit) at about 85% run rate, reflecting improved demand and market conditions," the company said during the conference call.

Domestic Peer S-Oil Corp, whose main shareholder is Saudi Aramco, on Thursday said Asia's regional refining margins are expected to rise as the market tightens due to demand growth outpacing refining capacity amid low inventory levels.

SK saw its shares drop 2.6% by 0514 GMT, while Seoul's benchmark KOSPI was trading up 1.8%.

Analysts attributed EV maker Tesla's supply chain warning and delays in releasing its new vehicles to share drops in battery makers like SK. ($1 = 1,205.1200 won) (Reporting by Heekyong Yang and Jihoon Lee; Editing by Kenneth Maxwell)