Offshore oil and gas exploration and production site (Courtesy of Getty Images)
SK Earthon Co., the energy resources exploration and production (E&P) unit of South Korea’s energy giant SK Innovation Co., is accelerating its global energy conquest after seizing a new E&P chance in Malaysia two years after it won its first oil field exploration bid in the Southeast Asian country.
SK Innovation announced on Sunday that SK Earthon won the rights to explore and operate the Ketapu Cluster, an oil field located off the coast of Sarawak region, from the Malaysian government and signed a production-sharing contract with the country’s state-owned energy giant Petronas.
SK Earthon will own an 85% stake in the Ketapu Cluster as an operator, while Petroleum Sarawak Exploration and Production (PSEP), Malaysia’s state-run oil and gas exploration company, will hold the remaining 15%.
The Korean energy resources E&P company projects it will start crude oil and natural gas production from the Ketapu Cluster in 2031 after conducting exploration and appraisal drilling of the cluster to determine its commercial viability.
The block is the second E&P rights the Korean company has won to explore oil reservoirs in Malaysia. In April 2022, it was awarded its first rights to explore and develop an oil field in the SK427 block in the Southeast Asian country.
As the new reservoir is located inside the SK427 block, SK Earthon plans to explore the two fields simultaneously to expedite oil discovery and production.
Ketapu Cluster in Block SK427 located off the coast of Sarawak, Malaysia (Courtesy of SK Innovation)
The two blocks are said to be more abundant with oil than an oil field in the South China Sea, from which SK Earthon started producing crude oil in September last year. Block 17/03 located in the eastern South China Sea is expected to yield about 50 million barrels of crude oil.
SK INNOVATION’S CASHCOW
With the additional oil field, SK Earthon’s contribution to its parent SK Innovation’s earnings is expected to further increase.
SK Innovation’s energy E&P business raked in 296.5 billion won ($221.4 million) in operating profit in the first six months of this year, already reaching 80% of last year’s profit. Over the same period, its sales reached 742 billion won.
The 17/03 block in the South China Sea is SK Earthon’s first oil field it has succeeded in exploration and production with its proprietary technology.
In November last year, it also found crude oil in an offshore block southeast of Vietnam after four years of exploration. The crude oil layers in the 16-2 block are located in the Cuu Long Basin, one of Vietnam’s most promising oil reservoir sections.
A series of latest exploration projects and discoveries are expected to help SK Earthon cement its footing as a major energy resources E&P company in China and Southeast Asia.
It first advanced into the energy resources exploration, development and production industry in 1983 and now produces about 57,000 barrels of crude oil and natural gas per day on average from 10 oil blocks and three liquefied natural gas (LNG) projects in eight countries.
SK Earthon is also speeding up efforts to enhance an environment-friendly energy portfolio to minimize carbon emissions.
In 2021, the company pledged to up green energy products to 70% of its entire business portfolio by 2025 from 30% to reduce its carbon footprint and create new sustainable business opportunities.
As part of the plan, it actively takes part in explorations of carbon dioxide storage sites from offshore basins to nurture its carbon capture and storage (CCS) business.
Last month, SK Earthon obtained a license to jointly explore a carbon dioxide storage field in Block G-15-AP off the coast of Western Australia.
It is carrying out 10 CCS projects, according to the company.
By Hyung-Kyu Kim
khk@hankyung.com
Sookyung Seo edited this article.
