SK Innovation wins second oilfield exploration contract in Malaysia to maintain strategic dominance in energy resource exploration and production in China and Southeast Asia

SK Earthon, the exploration and production (E&P) arm of South Korea's SK Innovation, is seeking new exploration opportunities in Malaysia to advance its global energy strategy. The move follows the company's first successful exploration of an oilfield in the Southeast Asian country two years ago.

On September 8, SK Innovation announced that SK Earthon has won the right to explore and develop the Ketapu oilfield block off the coast of Sarawak, Malaysia. The company has signed a production sharing contract with Malaysia's state-owned energy giant Petronas.

Under the agreement, SK Earthon will hold an 85% stake in the Ketapu block as an operator, with Malaysia's state-owned Petroleum Sarawak Exploration and Production (PSEP) holding the remaining 15%. The South Korean company expects to start producing crude oil and natural gas in the Ketapu block in 2031, after conducting exploration and appraisal drilling to determine the commercial viability of the field. The new project is SK Earthon's second exploration project in Malaysia. The company previously acquired the exploration rights for the SK427 oil field block in April 2022, and plans to explore both fields simultaneously to speed up discovery and production.

The oil reserves in the Ketapu block and the SK427 block are expected to exceed those in the Nanhai oil field, which SK Earthon began producing in September last year. The Nanhai Block 17/03 is expected to produce about 50 million barrels of crude oil. With this new acquisition, SK Earthon is expected to further increase its contribution to SK Innovation's earnings. In the first half of this year, SK Innovation's Energy Exploration and Production division reported an operating profit of 296.5 billion won (US$221.4 million), accounting for 80% of last year's total profit, and sales reached 742 billion won.

The Nanhai Block 17/03 is the first oil field project successfully developed by SK Earthon using its proprietary technology. Last November, the company discovered crude oil offshore southeastern Vietnam after four years of exploration. The crude oil deposit of Vietnam 16-2 is located in the Cuu Long Basin, an area with extremely high oil reserves.

These recent exploration projects and discoveries are expected to consolidate SK Earthon's position as a major player in the exploration and production of energy resources in China and Southeast Asia. Since entering the industry in 1983, SK Earthon has grown to produce an average of 57,000 barrels of crude oil and natural gas per day in 10 oil blocks and 3 liquefied natural gas (LNG) projects in 8 countries.

SK Earthon is also committed to enhancing its environmentally friendly energy portfolio to reduce carbon emissions. The company aims to increase the proportion of its green energy products in its business portfolio from 30% to 70% by 2025. As part of this strategy, SK Earthon is actively involved in CO2 storage exploration, including the recent acquisition of a license for a CO2 storage field in the G-15-AP block in Western Australia. The company is currently involved in 10 carbon capture and storage (CCS) projects.