Continued Focus on Exports

SK Energy determined to beat last year's record exports in 2008


SK Energy's investment this year will total around 1.44 trillion won, up 10 percent from last year, in the areas of upgrading production facilities, R&D for new energy and replacement energy sources, and marketing in order to secure more energy sources to enhance its global competitive edge, the company announced recently.
Vice Chairman Shin Hyeon-chul said the this year's investment is intended to lead the company's growth into the future as a means to secure a differentiated global competitive edge in a difficult business environment amid high oil prices and reduced profit margins caused by excessive competition.
He said the company's record exports, amounting to over $16 billion, is owed to a daring investment strategy and that this year, adding that the oil and petrochemical businesses seem unclear, the company will need to find future growth engines for difficult times.
The investment figure is almost equal to the operating profit the company recorded last year and is the largest amount to be invested in facility, R&D, natural resources development and marketing in the company's history, aside from when the company took over Incheon Oil Refinery in 2006.
The investment allocated to the R&D sector amounts to 144.4 billion won, up 46.5 percent, facilities investment is 694.3 billion won, up 64.5 percent, funds for marketing totals 105.2 billion won, up 56.3 percent and the investment in natural resources exploration is set at 453.9 billion won. All of the investments are designed to develop new growth engines and to enhance the company's global competitiveness.
The investment in facilities is geared toward upgrading existing facilities, the expansion of storage facilities, boosting the installations'effectiveness and expansion, especially in desulfurizing facilities, control equipment of volatile organic compounds and selective catalytic reduction installations.
Investment in the R&D sector is aimed at facilitating research on the discovery of new growth engines and energy sources that are environment-friendly. The investment allocation for R&D has been rising by 20 percent annually for the past several years. The R&D sector has been reorganized and incorporated with the mid- and long-term strategic plans under the name of P&T (corporate planning and global technology) becoming a company within company.
The investment in marketing is designed to diversify the global market for the company's products and to sustain the company's leading position at home and abroad. It is aimed at maintaining the level of exports, which accounted for more than 50 percent of the company's sales last year.
The investment in oil exploration will be about the same as last year, which is far larger than the company's profit in the crude oil drilling business, amounting to 322.5 billion won. The company will try to expand its daily oil production from 22,000 barrels per day to 31,000 barrels per day by producing oil from its Brazil BMC-8 mining district.
SK Energy will try to expand the synergy from its takeover of Incheon Oil Refinery on Feb. 1 as much as possible in an effort to double its global competitive edge and sustain the growth momentum of its business.
In the meantime, SK Energy's daily oil refining capacity has been increased to 1.12 million barrels per day with the recent takeover.
The oil refining capacity ranks fourth in Asia after Sinopec's 2.82 million barrels per day, PetroChina's 2.33 million barrels per day and Nippon Oil's 1.21 million barrels per day.
The oil company, with its oil production facility located in Incheon now, has secured a multi-refinery system, which will facilitate its business operations, including in China. SK Energy officials said they plan to take advantage of their geographical advantage in strengthening its export drive and make sure that this year's exports of petroleum products will exceed the record set last year. They will focus on the expansion of their business in China under the catchphrase of 'China Insider'with the neighboring country as the center of the company's global operation. The strategy has been praised as a great success under the leadership of Chairman Chey Tae-won, who looked at China as a key to the company's overseas business operation.
The growth of business is a big asset to a company in conducting negotiations with other firms and a positive influence in its resources exploration projects around the world. nw

Chairman Chey Tae-won of SK Group.