SK Energy Splits into Refining, Petrochemical Businesses

Company strives to maximize corporate and shareholder value

SK Energy has decided to split the existing business structure into refining and petroleum businesses, tentatively named SK Energy Refinancing & Marketing Co. and SK Energy Chemical Co., in order to help each business focus on future businesses, including petroleum exploration and new and renewable energy.
The nation’s largest refinery announced that SK Energy’s board of directors approved the restructuring plan on Sept. 30.
“Upon review of various strategic options to meet new challenges amid rapidly changing market conditions and to seek continued growth, SK Energy has decided to restructure the Refining and Petrochemical businesses to allow each business division to focus on its given industry by enhancing core competitiveness and flexibility,” SK Energy officials said.
The Refining and Petrochemical businesses will each become a separate entity with a focus on strengthening its core business and implementing new growth strategies with the flexibility and autonomy of an independently governed management, they said.
According to the officials, through this strategic portfolio restructuring, SK Energy will focus on continued value creation through new technology-based growth drivers, global expansion and creative innovation, thus securing portfolio flexibility and raising overall corporate value.
Specifics, including plans to relist the new entities and dispose of its stakes, have yet to be disclosed, SK Energy officials said.
During the first six months of this year, SK Energy earned 68 percent of its total revenues from the petroleum sector and the remaining 29.8 percent from the petrochemical sector. SK Energy is faced with a decline in profits, caused by the cutthroat competition of new global players in China and the Middle East. Companies are scrambling to grab stakes in future industries. Recognizing a rise in the value of natural resources and new and renewable energy, SK Energy has focused its investments in the resource exploration and secondary battery sectors.
Following the restructuring, SK Energy will be a holding company and will own a 100-percent stake in both SK Energy Refinancing & Marketing Co. and SK Energy Chemical Co. SK Energy will likely secure financial ammunition by disposing of a maximum 30 percent stake in the two entities through relisting, business sources said.
SK ENERGY STRIKES CRUDE OIL IN VIETNAM ― SK Energy said on Oct. 3 that it discovered crude oil reserves off Vietnam’s southern coast in the latest of a series of successful petroleum exploration achievements.
Drilling at the second well of the 15-1/05 Block discovered a source of about 3,500 barrels of oil per day, the refiner said Sunday. The discovery site of crude reserves was 25 km north of the first drilling site.
SK Energy and other business partners have participated in the prospecting of the 15-1/05 Block, located 180 km southeast of Ho Chi Minh City, since February 2007. The nation’s largest refinery succeeded in the discovery of 4,300 barrels of crude oil per day in a test drilling of Lac Da Nau in the southern area of the block last December.
SK Energy has a 25 percent stake in the oil block. Phu Quy Petroleum Co., a subsidiary of state-run Petrovietnam Exploration and Production Corp., owns a 40 percent share while Total E&P Vietnam has a 35 percent stake.
SK Energy said the latest discovery could help expand its presence in the Southeast Asian country. nw

SK Group Chairman Chey Tae-won