SK's Global Marketing Push
Oil refiner to expand China operation, build LNG plant in Peru

SK Corp. projected its exports this year would continue to expand, with the largest oil refiner and explorer focusing heavily on its operation in China, to spur its globalization, said President Shin Hun-chul at his first media conference on January 12 this year. The company exported over $10 billion worth of its products last year, up 23 percent over 2004 and this year, too, the company is resolved to make an all-out push to expand its exports. The export figure shared 47 percent of the company's total sales last year, showing that the company is an export enterprise, not a domestic oil refinery only.
SK will speed up facility investment, and market exploration by its business departments to expand its exports and the company has already completed a detailed plan for its business this year broken down by sectors. The company again will strengthen its operation in China as the central focus in its overseas marketing plan to increase exports. The company also plans to ship more of its oil products to the United States, and Europe, not limited to China, Japan and the Asia-Pacific countries including Australia in an effort to diversify its global market. It is counting on synergy effect with Incheon Oil when its new subsidiary resumes operation. The company will also explore markets outside the region to raise its profitability.
The company's business strategy includes expanding exports of chemical products, which made up 63 percent of its exports last year, to the level of 2.5 million tons, with China expected to take a lion's share of the figure. Exports of lubricating oil under its own brand name of "ZIC"has been shipped to some 20 countries in the world including China and Russia, earning more than 50 billion won annually will also be expanded under the company's strategy for this year, with a heavy focus on Russia.
SK currently is in third place in exporting lube oil to Russia, behind Shell and Exxon-Mobile as a result of its growing brand name recognition, which has been rising sharply in recent years due to competitiveness of its quality and price. It helped expanding its share of lube oil market in Russia. The company plans to enhance its cooperation with Korean auto makers to sell its lube oil in China under its marketing strategy, which also includes its market penetration plan in India.
SK will also push exports of asphalt, which takes up 70 percent of the product out of 2 million tons produced annually. It shares 40 percent of China's asphalt imports. The company plans to draw up its strategy to expand asphalt exports to the remote inland regions including northeastern provinces in China this year, where demand for the product is likely to rise under China's extensive development plan for those regions. Taking advantage of its know-how in producing lube oil for cold regions, the company also plans to penetrate lube oil markets in Siberia and Sakhalin.
A SK official said the share of exports in the company's total sales would grow to around 60 percent by 2010 under its continuous export drive under a strategy to make SK a major company in the Asia-Pacific region.
In the meantime, SK will start its exploration of LNG in Peru from this year, jointly with Hunt Oil of the United States and Repsol of Spain under an agreement signed with the Peruvian government on January 13.
The huge project will involve a plan to build a LNG liquefaction plant in Pampa Melcholita located some 170 km from Lima, the capital, and sale LNG to the western United States and Mexico. The LNG plant will facilitate the liquefaction of natural gas produced in Peru's Casimia mining district and 56 mining district. The plant is expected to be completed in 2009. Hunt Oil is the largest stake holder in the project with 50 percent followed by SK with 30 percent and Repsol 20 percent.
The project is estimated to produce supply 4.2 million tons of LNG during 18 years and 6 months SK Chairman Chey Tae-won and Peruvian President Alejandro Toledo met during the APEC Summit meeting in Busan in November last year and agreed on the importance of the LNG project and strengthen ties between Korea and Peru. nw

Peruvian President Alejandro Toledo, right, shakes hands with an official of Hunt Oil of United States after signing an agreement to explore natural gas in Peru.