Let us build a groundwork for sustainable growth with challenges and innovations

I wish 2022 will bring happiness to you and your families.

Over the past two years, we have faced numerous challenges in a turbulent management environment as we navigated the Covid-19 pandemic. However, thanks to all the members’ dedication and efforts, we have overcome these hardships and made major improvements and significant outcomes, including financial performance.

As we firmly established a stable process operation, we obtained structural advancements such as the expansion of direct crude oil import, the lifting of water depth restrictions, the reduction of vessel demurrage, and others, all while making diverse efforts to reduce utility costs, ship repairing costs, and wastes. Furthermore, we achieved a remarkable result by overcoming numerous hurdles in order to expand the scope of operation limit. We also delivered substantial asset efficiency gains by decreasing inventory and selling idle lands, to name a few.

On the other side, new businesses based on hydrogen, biofuel, recycled plastics, and technology that will drive our company’s environmentally responsible future are taking shape with increasing possibility through business partnering and co-operations.

The near future would be fraught with uncertainties and obstacles to conquer. However, we will make 2022 the foundation for sustainable growth by introducing new challenges and breakthroughs, and I would like to suggest three important missions below:

First, securing sustainability through operational competitiveness

To adapt quickly to a volatile market environment and maximize profits, we must get flexibility for facility operation and boost margins by concentrating our capabilities. In addition, we should continue to optimize various costs and explore innovative ways to generate additional profits. In this regard, our immediate task is to accomplish the entire procedures of T/A flawlessly in 2022. With the T/A, we will be able to increase facility reliability, undertaking projects to ensure cost competitiveness such as energy efficiency improvement, while pursuing strategic businesses to generate new revenues such as hydrogen business and waste heat recovery, among other things. We must accomplish these jobs successfully while maintaining SHE and reliability at all costs.

Second, materialization and acceleration of low-carbon based growth

We have so far made numerous efforts to turn the risk of de-carbonization into opportunity, and obtained significant results such as by-product hydrogen sales, confirming tech biz potential. However, we need to focus on and increase our own fortes such as the locations in the Seoul Metropolitan area, by-product hydrogen, SHE/Tech capabilities to substantiate and expedite businesses. We should develop the low carbon-based optimized switching option for the existing businesses to garner mid-and-long term revenues while reaching fruition in the fields of biofuel and recycled plastic by raising the possibility for partnering businesses. In addition, we should work together to obtain sizable outcomes in tech-based businesses such as the organic wastes resource and SHE management system. These efforts will enable our company to secure a stable foundation for growth and step forward to net-zero and ESG management.

Third, fearless organizational culture and competency building for members

We established the financial story, together with initiatives to ensure our business sustainability and low-carbon future growth. The primary enablers for success are “fearless organizational culture” and “member competencies.” We must make a concerted effort to create an organizational culture where people can express themselves freely, with mutual respect, and take risks without fear of failure. Furthermore, we will design the financial story implementation method to be directly related to the members’ capability building in order to promote their potentials. They will ensure that members’ efforts result in performance so that individual growth translates into organizational growth.

Beloved SK Incheon Petrochemical members,

I know that you have the passion in your heart to surmount crises together and generate a brighter future. I believe that our efforts to emerge from the choppy waters of the Covid-19 and the recession will bear fruit. After a period of endurance, SK Incheon Petrochem will be a trusted and respected enterprise in the community, and it will be a source of pride and growth for ourselves. I hope you will join me in making 2022 a great year for all of us.

I wish every member a happy new year, and may the coming year bring you more energy and better days.

Thank you.

January 3, 2022

Choi Yun-seok

CEO & President of SK Incheon Petrochem