As SK Innovation celebrated its 60th anniversary in 2022, 2023 marks the beginning of a new 60 years of its history, and it is also the second year the company and all subsidiaries execute their Financial Story.
To learn more about the company’s strategies and plans for this year, we’ve met the executives of SK Innovation and its subsidiaries and asked them in detail. The sixth guest of this interview series is Choi Yun-seok, CEO of SK Incheon Petrochem. CEO Choi shared with us as the company is on its way to leap forward as a Green Energy & Solution provider that brings positive impacts on the environment and society.
Q1. SK Incheon Petrochem has grown into an energy supply base in the metropolitan area with the strong roots of its existing businesses over the past 50 years, while the company sets itself a task of strengthening its growth axis through Green Transformation hereafter. Could you briefly share with us the achievements of SK Incheon Petrochem in 2022 and your determination for 2023?
2022 was a challenging year when faced difficulties such as the prolonging COVID-19 pandemic, skyrocketing oil prices, and so on. Nevertheless, last year, in my mind, was also a time when all members of our company united under one will and made effort to prepare the company’s foundations for sustainable growth. Particularly, I found that the members’ competencies had grown more by successfully finishing our regular maintenance last September and October.
This year, the business environment will still be uncertain, and many obstacles are there to overcome. However, through the spirit of taking on challenges and making innovations, we will make 2023 a year of the foundation for sustainable growth. Along with securing sustainability from our competitiveness in SHE (Safety, Health, Environment) and reliability, we will actively participate in reinforcement of our growth pillars through Green Transformation. Moreover, within the corporation organization, we will keep solidifying the “fearless organization culture” enhancing the members’ competencies.
This year marks the 10th anniversary since SK Incheon Petrochem launched as a subsidiary of SK Innovation, equipped with its separate management system. While the corporation has focused on raising its fundamental strengths for its sustainable growth until now, we aim to make actual outcomes of “Carbon to Green” and achieve innovations in the business portfolio from this year by reinforcing its executive ability for the Financial Story.
Q2. You remarked that SK Incheon Petrochem is reinforcing its ability to execute the Financial Story for the “Carbon to Green” growth. So what are the detailed strategies for that?
The key of SK Incheon Petrochem’s Financial Story is to raise corporate values by developing new profit-making businesses rather than improving profitability in existing businesses, and through responses to reduced demands for transport oil fuel products, while carrying forward “Carbon to Green” growth at the same time. In order to turn the de-carbonization into new opportunities for us, we’re specifically building optimized conversion options based on low carbon emissions, including rearrangement and reapplication of our existing assets. And we have newly established the Green Innovation Propulsion Office to bring results to these practices and move them to the next phase.
SK Incheon Petrochem’s goal is to grow into a corporation that can bring positive impacts on the environment and society by methods of “Green Energy” and “Green Solution.” It is not only for the sustainable growth of the company, but also for the community and country in which we are rooted, and furthermore, for the Earth that we live in.
There are three main directions of SK Incheon Petrochem’s Green Biz transition strategy.
First, we rearrange the existing carbon-related assets to create an environment optimized for investment. This is to maximize the investment efficiency and react organically to domestic and overseas changes in investment circumstances.
Second, we promote Green Biz. by expanding strategic partnerships and connecting with local communities. SK Incheon Petrochem’s location in the metropolitan area is advantageous for building cooperative relations with the central or local governments, as well as outstanding corporate institutions.
Last, for swift business implementation, we will accumulate experiences of success by quickly entering (quick-in) in small sizes, and expand our business based on this. As we’re now living in the VUCA* era, I think it’s important to accumulate experiences from swift actions.
(*) VUCA: Volatility, Uncertainty, Complexity, and Ambiguity. It implies a social environment that is volatile, uncertain, complex, and ambiguous.
▲ SK Incheon Petrochem CEO Choi Yun-seok is having a conversation at a meeting with technology team leaders in August 2022.
Q3. You just mentioned that the company is preparing optimized conversion options based on low-carbon emissions. Could you name a few examples?
One of SK Incheon Petrochem’s strengths is that it’s the only petrochemical company located in the metropolitan area of Korea. So it’s surrounded by an optimal environment to enter the recycling business and bio-fuel markets.
In line with the timely demand of establishing a resource recycling society for carbon neutrality, SK Incheon Petrochem is pursuing a waste resource recycling business.
Currently, our members are making efforts to achieve tangible results in the waste plastic and waste tire recycling field through strengthening partnerships with excellent domestic and foreign companies and efficient conversion of existing assets.
In addition, we plan to leap forward as a domestic bio jet fuel production base. As the demand for land fuel is expected to decrease in the long term, the proportion of petroleum products such as gasoline and diesel has to be gradually reduced, while the demand for eco-friendly fuel will increase, especially in the field of aviation. Therefore, it is necessary to respond to this shift.
On the other hand, as demands for eco-friendly fuels will rise and as this trend is evidently predicted particularly in the aviation sector, we need to respond to this situation. The aviation industry has already been keeping up its efforts to secure Sustainable Aviation Fuels (SAF) in response to global carbon regulations. SK Incheon Petrochem is located in Incheon, the gate city to Korea, and an international airport sits nearby. Currently, we are drawing a blueprint for the business, such as promoting the establishment of partnering for the supply of bio-fuel. We plan to promote business quickly and efficiently by converting existing facility assets and utilizing capabilities.
In addition, we plan on maintaining partnerships for smooth progress in the hydrogen business through supplying byproduct hydrogen and aiding commercial operations for the success of the Incheon Liquid Hydrogen Plant construction project, a project in connection with SK Group’s hydrogen business strategies.
Q4. If recycling businesses are Green Transformation of existing business, a project for building eco-friendly livestock industry models seems to be a challenge towards a new field. And it is known that a full-scale demonstration project has now been launched in earnest.
▲ (Left) On June 14, 2022, (From the left) CEO of SK Incheon Petrochem Choi Yun-seok, Minister of Agriculture, Food and Rural Affairs Jeong Hwang-geun, and Vice President of the National Agricultural Cooperative Federation Lee Jae-sik are taking a commemorative photo after sealing a MOU for the “Building Eco-friendly Livestock Industry models,” held at the Grand Meeting Room of SK Incheon Petrochem. / (Right) On June 14, 2022, CEO of SK Incheon Petrochem Choi Yun-seok (Sixth from the left), Minister of Agriculture, Food and Rural Affairs Jeong Hwang-geun, and Vice President of the National Agricultural Cooperative Federation Lee Jae-sik are taking a commemorative photo after sealing the MOU on “Building Eco-friendly Livestock Industry Models” and visiting the main facilities of SK Incheon Petrochem.
The business aims to implement SK Incheon Petrochem’s technology capabilities and know-hows accumulated for more than 50 years in the environment and safety sectors into the livestock industry sector and build eco-friendly models. It’s a business that reduces greenhouse gases and odors emitted from livestock farms and turns livestock excretions into energy resources.
Last June, we have sealed the MOU with the Ministry of Agriculture, Food and Rural Affairs, the National Agricultural Cooperative Federation (NACF), and others to promote this business. And we plan to conduct the pilot project in the Pig Breeding Genetic Improvement Center, an affiliate office of the Gochang Regional NACF in Jeollabuk-do. For the pilot project, we plan to introduce fire detection technologies using intelligent CCTVs as well as odor reduction technologies that we accumulated from experiences of running oil refinery petrochemical plants, so it is expected to improve odor problems, prevent fires, and reinforce security at livestock facilities. Our plan is to establish the demonstration model early and expand the business on a nationwide scale.
Our core goal of this project is to build industry models that contribute to greenhouse gas reduction by generating renewable energy from turning livestock excretions into bio-gases.
Q5. In your recent New Year’s Greetings, you put a great emphasis on competitiveness in SHE and Reliability. Would you elaborate on that point, please?
▲ (Left) At the Accident-free Oath Ceremony for Regular Maintenance held in September 2022, SK Incheon Petrochem CEO Choi Yun-seok emphasized safe works and unrestrained communication to staff members. (Right) SK Incheon Petrochem CEO Choi Yun-seok is encouraging trainees at a trainee conference held in last January.
We have to secure top-class SHE and Reliability to create profits while promptly responding to the fluctuating market environment, and develop new profit potential while minimizing various costs. To reiterate, this has to be our assets and competitiveness.
In other words, flexible plant operation is possible only when it’s based on the staff members’ creativity and innovation on top of safe operation. So far, we have been doing our best in various ways and have improved our SHE and reliability significantly. Still, there is room for more improvement to reach the world-class level. Just a little more improvement and innovation are needed to promote the enterprise value to the next level. Also, they can be the key factors in solidifying SK Incheon Petrochem’s sustainability.
Our business site is located in the middle of the city center in the metropolitan area. All of staff members share a consensus that we’re not able to survive without the capacity to manage not only the environment but also safety. But I believe we can achieve world-class standards when our members put their strengths and wisdom together.
Q6. As a representative local corporation in Incheon, SK Incheon Petrochem is known to conduct a variety of activities for joyful coexistence with local communities in the region. Mutual growth with the local communities is expected in the future as well.
▲ (Left) In October 2022, CEO of SK Incheon Petrochem Choi Yun-seok is serving coffee and beverage to members of partner companies as a one-day barista to celebrate the 60th anniversary of SK Innovation’s foundation. / (Right) CEO of SK Incheon Petrochem Choi Yun-seok (Fourth from the left), is planting a tree with members, commemorating the 60th anniversary of SK Innovation’s foundation.
I felt so sorry that I couldn’t meet local residents in person due to limitations in face-to-face volunteer activities over the last three years of COVID-19. Fortunately, as the corporation has recently resumed face-to-face activities in some areas, I wish the members and the residents share happiness by communicating with each other this year.
Last October, commemorating the 60th anniversary of SK Innovation’s foundation, we planted a royal azalea tree in a nearby park to extend our gratitude to the residents who were supportive for the corporation’s growth and development all the time. Moreover, various activities were conducted to establish a social safety net, such as repairing homes for the vulnerable, supporting medical expenses for the elderly, and supporting independence of children with developmental disabilities. It also provided support to foster future talent by donating environmental science books to local libraries and opening play science classes for elementary school students.
▲ (Left) CEO of SK Incheon Petrochem Choi Yun-seok (third from the right) is taking a commemorative photo after presenting the mutual prosperity fund to partner companies at the “Presentation Ceremony of 1% Happiness Sharing Fund” held in August 2022. / (Right) In December 2022, SK Incheon Petrochem won a presidential citation at the”2022 Korea Volunteer Service Award” ceremony held in Centennial Hall, Yonsei University. , CEO of SK Incheon Petrochem Choi Yun-seok, is receiving the presidential citation at the ceremony on the day, representing the corporation.
Our members who brought their kind minds together enabled the mutual prosperity with local communities. Thanks to our members who actively joined in creating the “1% Happiness Sharing” fund and voluntary activities, we also received an honorable presidential citation in the “Korea Volunteer Service Award” last December. I believe this award was given to not only to the corporation, but also to all of its members. I’ll continuously put in more efforts to make the corporation grow with local communities.
Q7. Please leave a message to readers of SKinno News, stakeholders, and SK Incheon Petrochem’s members who are making their own efforts to practice the Financial Story.
To accomplish the Financial Story, we should continuously enhance our members’ competencies as well as the “fearless organizational culture,” where we can speak confidently based on mutual respect and take on challenges without fear of failure. Thanks to the efforts of all members to create such an organizational culture, we are seeing positive changes.
I believe these changes increase communication and lower the huddles for a new challenge. Also, thanks to efforts and capabilities each member has shown, the company’s growth is ongoing, phase by phase. And I would like to ask our members to make an enterprise-wide consensus in successfully settling down the aforementioned “fearless organizational culture” so that individual’s efforts to improve his or her capabilities can become the company’s unique identity.
▲ (Right) In April 2022, Choi Yun-seok, CEO of SK Incheon Petrochem (First from the left) and staff members are taking a commemorative photo with Kim Jun, Vice Chairman & CEO of SK Innovation (Fourth from the left), who visited the company’s Cherry Blossom Garden.
I think this year will be the most critical period for the company to be upgraded into a “Green Energy & Solution Provider.” I wish the company as well as all the members to set new goals and collaborate to be pioneers with their challenging spirits. I’m calling on both of the members and stakeholders to support and keep watching SK Incheon Petrochem on the challenging road of “Carbon to Green”. Thank you.