SK Corp. Out to Make Korea Oil Producing Country
- Explores oil in 11 foreign countries since 1984

SK Corp. is either producing or exploring oil and gas in 17 mining blocks in 11 countries around the world since kicking off its overseas oil exploration project in 1983. Yemen, Egypt, Vietnam, and Peru are some of the countries that the company has been engaged in an exploration project, securing some 300 million barrels of crude oil, about half of oil consumed annually in Korea, putting the company into the 30th place among 200 oil explorers in the United States.
In the first half of this year, sales revenue of oil and natural gas amounted to 100.5 billion won with net profit of 80.5 billion won. In the third quarter alone, sales revenue edged up to 75.7 billion won with net profit of 52.8 billion won. SK first hit the jackpot in the Marib oil field in Yemen in 1984, realizing a dream of becoming an oil producing country for Korea. The oil field was the second one that the company decided to tap and the commercial operation of the oil field took shape in 1987 and it still is continuing.
The 15-l oil block in Vietnam in which the company holds 9 percent stake since 1998 was discovered to contain 420 million barrels of oil and the company continued to find oil wells in the Southeast Asian country. The oil well started its commercial operation in October, last year pumping 60,000 barrels of crude oil per day, rising to 85,000 barrels per day in November this year. In case of an emergency, SK and the Korea National Oil Corp. will be able to import 5 million barrels of oil per year from the oil field. SK, in joint venture with Hunt Oil of the United States, successfully explored natural gas in Camisea oil field in Peru and NC-174 block in Libya, securing a sizable quantity of LNG.
Peru's Camisea gas field is estimated to contain 8.7 trillion cubic feet of natural gas and if 600 million condensate is added it would be around 2.05 billion barrels of oil when converted into oil. It went into commercial operation from August this year. SK holds a 17.6 percent stake in the exploration and production sectors (upstream) and 11.19 percent stake in the pipeline operation (downstream).
The company plans to continue to work on pumping oil in commercially operable oil fields that it has stakes in, along with efforts to participate in promising new fields with a high possibility of finding oil. It also will look for chances to buy proven oil or gas fields.
The company plans to look for exploring oil or gas in the Caspian Sea and Sakhalin Island, among others.
The company pumped up 14,000 barrels of oil per day from its offshore oil fields last year, which increased to 21,000 barrels per day this year, a rise of about 50 percent from oil reserves secured through its stakes. It was further increased to 24,000 barrels per day in November. The company plans to increase it to 30,000 barrels per day next year and 100,000 barrels per day in 2010 and meet half of the 10 percent oil-self sufficiency rate targeted by the government.
SK's overseas oil exploration project started in the 1980s under the company's late chairman Chey Jong-hyun as part of his dedication to make Korea, an oil producing country, although it doesn't have proven oil fields in the country. The current chairman inherited the will of his father, the late chairman and expanded it. Early this year, the chairman set up the Resources and International Department to integrate and streamline the company's overseas oil exploration sector and in the process, make the company a leading energy and chemical producer in the Asia-Pacific region.
SK Corp. (Chairman Chey Tae-won), one of the world's leading companies, announced plans recently to invest $15 million in a new solvent manufacturing plan in Shanghai, China, as part of a joint venture with top Chinese chemicals corporation SINOPEC.
The investment marks the latest stage in SK Corp.'s expansion into the Chinese market under a projection that its sales in China would reach more than $5 billion a year by 2010.
Under the terms of joint venture, SK Corp. and SINOPEC will own 50:50 stakes in the newly established solvent manufacturing corporation, Shanghai Gaqiao-SK Corp.
Solvent Co., with a total investment between the two firms of $30 million in the new plant. The new facility will have a capacity of 60,000 tons per year and will produce environmental-friendly solvent products.Kim Chi-hyung, senior vice president, chemicals business division, SK Corp., said, "This joint operation is the first of its kind, involving the leading energy/chemicals corporations in Korea and China. We believe that this venture can be the opening chapter in a new period of cooperation between both of our organizations and, in deed, both of our countries." He said, "Our ambition is to become the leading energy/chemical corporation the Asian-Pacific market and to establish our presence in this sector at a global level. We believe that this partnership with SINOPEC will be critical to helping us achieve this objective."
The size of China's overall solvent market is 2.7 million tons per year with a projected annual growth rate of 10-15 percent. Solvents are used in the chemical processing of a vast range of products, such as paints, inks, cleaners and glues, among others.
Under the joint venture, SK Corp. will provide its advanced solvent production technology and marketing/operations expertise, while SINOPEC will provide raw materials and utilities, as well as other key elements of the required solvent production infrastructure. SK Corp. plans to sign a separate contract for transferring technology systems to the joint venture. Construction will begin on the plant shortly and commercial production is scheduled to start by the second quarter of 2006. nw