■ Commenced oil production in an offshore oil block in the South China Sea in September with a daily maximum production capacity of approximately 29,500 barrels

■ The first successful project of the company achieving success in all stages, from exploration and development to production, with its own operational excellence accumulated over the 40 years, in an oil field for which the company holds operation rights

■ SK Earthon CEO Myeong Seong said, “We will continue to create outcomes in the two pillars of our business, E&P and CCS businesses, to achieve our goal of carbon neutrality and growth of the company”

SK Earthon has commenced oil production in an offshore block in the South China Sea, in which the company has participated since 2015. This achievement marks the company’s first successful case of crude oil production in an oil field in which the company secured operatorship in the block. This is expected to contribute to reinforcing South Korea’s energy security through resource acquisition.

On September 25, SK Earthon announced that it would start oil production from September in LF (Lufeng) 12-3 oil field in the Block 17/03, located in the northeastern region of the South China Sea. The block is approximately 300 km away from Shenzhen, China. In terms of the daily production capacity, based on the Peak Production, the field produces about 29,500 barrels (bbl), which accounts for more than 1% of South Korea’s daily oil consumption.

As the first South Korean private company, SK Earthon entered the offshore block in the South China Sea by signing a petroleum contract with CNOOC (China National Offshore Oil Corporation), a Chinese state-owned oil company. With an operatorship for the block, the company successfully discovered oil during the drilling of the exploration well in 2018 after conducting geological and geophysical surveys. Following the completion of the development phase including oil field appraisal and construction of production facilities, SK Earthon finally reached the commencement of oil production.

This oil production holds significance as it is the first time that SK Earthon successfully managed all stages of an E&P (Exploration & Production) project for which it holds operatorship, from exploration and development to production. Moreover, the company’s successful achievement is based on its operational excellence from initial exploration phase to oil production.

In particular, SK Earthon has taken ecological measures into account from the design stage to reduce carbon dioxide emissions generated during the oil production process. This includes the recycling of waste heat from the power generator’s exhaust gases, automation in production facilities and etc. Furthermore, the company is actively considering options, such as the introduction of LNG supply vessels and the use of new renewable as part of its plans to continuously put our efforts in carbon dioxide reduction by applying these measures.

The Block 17/03 is a successful case for the South Korean government’s energy support program. Since 1984, the government has been operating a loan support system aimed at assisting domestic companies in overseas oil & gas development projects. With the commencement of production in the Block 17/03, SK Earthon will begin to pay back the government’s loan principal with interest and after the full repayment, a portion of the profits will be shared with the government in the form of special levy for a certain period.

Spun off from SK Innovation in 2021, SK Earthon is focusing its business on two pillars, which are the E&P and green business. SK Innovation entered overseas E&P projects from the Karimun Block in Indonesia in 1983 through equity participation as Korea’s first private E&P company. As its endeavor never ceased, SK Earthon, SK Innovation’s subsidiary, currently participates and manages 10 blocks across 8 countries and 4 LNG projects. Furthermore, the daily production of those 10 blocks reaches approximately 52,000 BOE (Barrel of Oil Equivalent). In terms of its other business pillar, a green business, by utilizing the company’s exploration technology that has been accumulated from the E&P business, the company pushes forward with CCS (Carbon Capture and Storage) projects, and currently, it has been focusing on discovering carbon dioxide storage sites by participating in various projects both domestically and internationally.

SK Earthon CEO Myeong Seong said, “We were able to achieve successful oil production based on the technological expertise that we have accumulated over the 40 years since we ventured into overseas resource development as the first domestic private company in 1983.” He added, “Along with our E&P business, we will continue to invest in our CCS business projects and achieve our goals of carbon neutrality and growth of the company.”

[Photos]

(Photo 1) Crude oil production platform installed in China’s 17/03 offshore block.

(Photo 2) Crude oil production platform and floating crude oil production and storage facility installed in China’s 17/03 offshore block.

(Photo 3) The location of LF (Lufeng) 12-3 oil field in the Block 17/03, China.

(Photo 4) The current status of SK Innovation’s subsidiary oil production development businesses.