SK Earthon wins 2nd oil field exploration bid in Malaysia

SK Earthon Co., the energy resources exploration and production (E&P) unit of South Korean energy giant SK Innovation Co., is accelerating its global energy conquest after seizing a new E&P opportunity in Malaysia. The move comes two years after it won its first oil field exploration bid in the 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 Sarawak coast — from the Malaysian government and signed a production-sharing contract with the country’s state-owned energy giant Petronas.

SK Earthon will hold 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 firm, will hold the remaining 15%.

The Korean energy resources E&P company projects it will begin crude oil and natural gas production from the Ketapu Cluster in 2031 after conducting exploration and appraisal drilling there 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 rights to explore and develop an oil field in the country's SK427 block.

As the new reservoir is located within the SK427 block, SK Earthon plans to explore the two fields at the same time to streamline oil discovery and production.

The two blocks are said to be better endowed with oil than an oil field in the South China Sea from which SK Earthon began producing crude oil in September 2023. Block 17/03, located in the eastern South China Sea, is expected to yield some 50 million barrels of crude oil.

SK INNOVATION’S CASH COW

With the additional oil field, SK Earthon’s contribution to its parent SK Innovation’s earnings is expected to ramp up.

SK Innovation’s energy E&P business raked in 296.5 billion won ($221.4 million) in operating profit in just the first six months of this year, 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 where it has succeeded in conducting E&P using its own technology.

In November last year, it 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 regions.

A series of recent exploration projects and discoveries are expected to help SK Earthon cement its footing as a major energy resources E&P player in China and Southeast Asia.

It first advanced into the energy resources exploration, development and production industry in 1983. Today it produces an average of 57,000 barrels of crude oil and natural gas per day from 10 oil blocks and three liquefied natural gas (LNG) projects scattered across eight countries.

SK Earthon is also accelerating efforts to enhance an eco-friendly energy portfolio to minimize carbon emissions.

In 2021, the company pledged to boost green energy products to 70% of its business portfolio by 2025, from 30%, to reduce its carbon footprint and create new sustainable business opportunities.

As part of that plan, it engages in exploring carbon dioxide storage sites at offshore basins to develop its carbon capture and storage (CCS) business.

Last month, SK Earthon secured a license to jointly explore a carbon dioxide storage field in Block G-15-AP off the coast of Western Australia.

It is currently conducting 10 CCS projects, according to the company.

Write to Hyung-Kyu Kim at khk@hankyung.com
Sookyung Seo edited this article.