SK Energy to focus on E&P, R&D of energy, to spin off refining and petrochemical sectors

21-Jun-10

Asia's No.4 crude oil refiner SK Energy, plans to focus on exploration and production of oil, and research and development of energy. The South Korean major plans to spin off its crude oil refining and petrochemical businesses to improve competitiveness by Jan. 1, 2011. SK Energy plans to improve success rate of exploration to 20% from 10% while enhancing its E&P business through various strategies, including mergers and acquisitions. It will seek a global partnership for its refining subsidiary SK Incheon Oil. SK Energy acquired the country's smallest, low-grade refiner Inchon Oil Refinery to start SK Incheon Oil in 2006 and to upgrade the facilities. The upgrade has been delayed until now, and run rates of SK Incheon Oil have been as low as 30-40% because of low profitability and the lack of high-grade facilities. Its joint venture with Sinopec Corp is scheduled to commence commercial production from 2012-2013. SK Energy plans to shift the headquarters function of its petrochemical business to China on July 1 as it aims to enter the Chinese market. SK Energy is also considering setting up a petrochemical firm in Peru to secure cheaper petrochemical feedstock than that from the Middle East.