As SK Innovation celebrated its 60^th 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. We invited Head of SK Energy P&M CIC Oh Jong-hoon as the seventh guest of this series to talk about how SK Energy P&M CIC will overcome difficult internal and external environments this year to become an eco-friendly platform operator.

Q1. Even though meaningful results were promptly achieved over the past two years since the SK Energy P&M (Platform & Marketing) CIC was launched, the business environment this year is expected to be more challenging than ever. What are your focus points in 2023?

▲ Oh Jong-hoon, Head of SK Energy P&M CIC

Tough business environment, caused by continuous sharp fluctuations of energy & raw material prices, high exchange rates, and high interest rates after the COVID-19 endemic, does not seem to die down easily in a short time. However, all members of P&M have teamed up with one mind to overcome difficult business environment, and we were able to get greater results promptly than the plan set up when CIC (Company In Company) was launched. As such, I do believe that in 2023 we can also sufficiently accomplish greater results than expectations if the efforts and courage of our members are supported.

Since P&M CIC’s establishment, it has secured professional capabilities and key technologies required for transforming its business model from its current state as a petroleum distributor into an eco-friendly platform enterprise. It has also focused on building a business base through convincing many stakeholders for improving various policies and regulations efficiently and supplementing inadequate systems.

This year, our oil marketing business will lead the oil distribution market structures in a wholesome way as the number one corporation in the market. Furthermore, we will strengthen the stable business structures through optimized brand-centric market operation to enhance consumer values. In addition, our S&P business will accelerate its evolution and development as an eco-friendly platform enterprise by speeding up its conversion into the phase of “Execution and Operation of Business Models” beyond the current phase of “Development and Preparation for Business Models.”

Q2. Last year, to celebrate the 60^th anniversary of SK Energy, you operated a unique pop-up store titled “SK Ju Yu So” (Korean wordplay meaning both “Gas Station” and “Liquor Station”). The customers’ reactions were positive, calling the store “fresh and fun.” The store is seen to communicate how the SK gas station is not merely a spot to fill gas but is also evolving into a place where you can use various eco-friendly customer services. Please tell us the background story of how P&M CIC set up this store, and also the plans to strengthen communications with customers this year.

▲ Head of SK Energy P&M CIC Oh Jong-hoon visits the “SK Ju Yu So” with the staff members to inspect the site’s preparation status ahead of opening on October 4, 2022.

Commemorating the 60^th anniversary of SK Energy’s foundation, it was necessary to find and redesign elements where the customers themselves can experience and imagine customer values that SK Energy provides inside the settings of a gas station, rather than a simple gathering of the materials in the company’s history, unilaterally displayed like museum relics. Keeping such a purpose in mind, the staff members proposed various wonderful ideas, and through active discussions among them with our members, we could create a pop-up store of a new concept never seen before in the world titled “SK Ju Yu So.”

Customers of diversified age groups including Millenials and Gen Z paid a visit to the “SK Ju Yu So” pop-up store and experienced a differentiated customer experience, which enabled them to perceive the gas station to be a more comfortable and closer place, by directly watching and feeling the past, the present and the future of P&M CIC. The gas station was organized to be a fun place that can give pleasure to the customers. WE have also prepared various goods and events. Because of these preparations, the store attracted as much as 5,200 customers during such a short time of 27 days, which is a better result than expected. All the earnings from the pop-up store were donated to purchase heating supplies for seniors living alone.

Through the pop-up store, we presented a fresh and young image of SK gas stations to customers, and at the same time, we were able to further enhance their understanding of the P&M CIC’s future direction.

Based on the experience of operating “SK Ju Yu So” last year, we intend to provide our customers with a ground for communication on the direction of P&M CIC’s change, as well as new customer experiences in a more special and fun way this year.

Q3. The eco-friendly energy solution business achieved remarkable results, such as securing the consensus on governmental regulation revisions by stably operating the fuel cells demonstration project in Bakmi and Gaenari Gas Stations last year. So what are the goals for this year?

▲ Head of SK Energy P&M CIC Oh Jong-hoon (fourth from the left), Vice Minister of Korean Ministry of Industry, Director of Climate and Environment of Seoul Metropolitan Government, and Chairman of Korea Petroleum Association take a commemorative photo at the first Energy Super Station opening ceremony held in the SK Bakmi Gas Station at Geumcheon-gu, Seoul, in February 2022.

Regarding the eco-friendly energy solution business, we are going to start establishing “eco-friendly energy production bases”.

For that, based on regulatory improvements to be implemented within the first half of this year, we plan to successfully carry forward the main project of the first SPC (Special Purpose Company) for fuel cell at about 100 gas stations in Seoul and the metropolitan area with investors who were recruited last year. Furthermore, we will smoothly execute and expand the comprehensive business model of “Distributed Power Generation of Fuel Cells + EV Charging” using the idle land owned by the government and public enterprises, including the Cheonwang Vehicle Depot.

We will secure the stability and then expand the scale of the Virtual Power Plant (VPP) business model that launched last December by additionally recruiting new resources of about 30 to 40 MW this year on top of the 31.2 MW of the local photovoltaic power resources accumulated by the end of 2022. In addition, among the 16 hydrogen refueling bases across South Korea that we secured last year, 4 hydrogen refueling stations, including the Incheon and Ulsan Netruck House hydrogen refueling stations, are going to start commercial operation this year, along with the expansion of new bases that will continue.

Q4. Eco-friendly TTS business globally secured the core technical capabilities in the sectors of EV charging and car washing through the equity investment in the technical enterprises last year. Please tell us about the direction of the eco-friendly mobility O2O platform business you are devising.

▲ (Left) Head of SK Energy P&M CIC Oh Jong-ho (first from the left) is looking around the installation sites of the EV charger of Atom Power in the Jong-Ro Tower parking lot this January. / (Right) “Autostay Goyang Newcastle” located in Goyang-si, Gyeonggi-do Province

The TTS business, as you mentioned earlier, secured the core technical capabilities through the equity investment in Atom Power in the US that possesses the medium-slow EV charging solutions based on power semiconductors and Autostay in Korea that possesses differentiated hybrid car washing technologies and subscription business models.

This year we plan to promote a pilot project for large distributors such as department stores and discount chain stores ahead of shaping up the first SPC main business along with optimized technical reviews on importing the Atom Power’s products to Korea. Also we will prepare the base for constructing speedy EV charging infrastructures along with securing captives such as the joint public taxi garage. On the other hand, we will also expand the pool of customers that use our eco-friendly mobility services by expanding the number of branches and franchises that sell Autostay products.

In addition, we plan to successfully launch “Muffin,” an O2O-integrated platform for eco-friendly mobility customers by rolling out the subscription program that provides various values such as price discounts for EV charging and car washing, through company’s differentiated offline sales network. .

Q5. The eco-friendly LDP business is a part of building up an “urban-type distribution business hub” to materialize the MFC BM. In last December, we sealed an MOU with NAVER* for “joint development of the urban distribution services and cooperation in future distribution technologies.” Please explain your business goal of this year and how you would cooperate with NAVER.

(*) Naver is a global tech platform, providing South Korea’s number one search portal for wide access to advanced technology

▲ “Goods FLOW,” MFC logistics platform company for SKE P&M CIC

In order to conduct the Micro Fulfillment Center (MFC) business based on gas stations, the eco-friendly LDP business secured the core capabilities through the equity investment in Goods Flow. Goods Flow has the capabilities in the areas of logistics and IT, by operating a fulfillment center and providing delivery tracking services to domestic e-commerce companies such as NAVER and Coupang.

We will develop MFC by using our networks of about 3,000 gas stations nationwide, while Goods Flow is responsible for MFC operations such as management of orders, inventories and deliveries based on its capabilities. By which, we will quickly establish the “Eco-friendly Urban Distribution Hub” that P&M CIC plans.

This year, we plan to preemptively secure quantities of the full capacity required to successfully open and stably operate the first MFC at Seocho-gu district, Seoul. We will also set up the second and third MFCs consequently in the areas of Seoul and the metropolitan area.

NAVER is the domestic No.1 e-commerce company possessing most of small and medium size sellers that have the needs for delivering goods stored in the MFC built by us. We are developing the business cooperation models in detail according to the MOU sealed with NAVER in December of last year. We have been operating “The Good Delivery Service” that can reduce the burden of distribution cost for small and medium sellers, since last February.

SKE P&M CIC and NAVER will continue mutual cooperation to develop new distribution business models including the delivery of live-commerce commodities in real time. Also, we will promote grafting the future technologies based on the AI and Robotics into distribution businesses such as MFC inventory predictions and autonomous robot delivery.

Q6. Your words made 2023 the most promising year for P&M CIC. If you have any message for the stakeholders, readers of SKinno News and staff members paying attention to P&M CIC, please share it with us.

▲ Head of SK Energy P&M CIC Oh Jong-hoon (second from the left) is communicating with staff members.

Last October, SK Group Chairman Chey Tae-won quoted “finding a different way rather leads us to a more favorable position and overcoming the adversity can make a good opportunity for us,” one of the phrases in “The Art of War” by Sun Tzu in the CEO seminar. It also indicates that even though current business environments may be difficult right now, we should prepare ourselves for a bigger leap to come after the crisis by trying to find new solutions through BM Transformation and others.

And I believe that it is in line with the direction that CIC should follow. It is a difficult path that nobody has ever gone, and yet we may make our own opportunities if we manage to overcome the sufferings. As the CEO and also a senior of the company, I am determined to solve various obstacles laid before us one by one through deeper and wider communication with the staff members.

Now nobody doubts our evolution and further development as an “eco-friendly platform enterprise” and more stakeholders are with us. I am confident that our history of growth will continue when all the staff members continuously gather their strengths and move towards the goal.