CEO & Leaders
[Interview] SK Innovation executives talk about plans in 2022, the first year of Financial Story execution ⑥ SK Incheon Petrochem CEO Choi Yun-seok: “We will secure sustainability through low-carbon-based growth strategy and, SHE & operational competitiveness”
2022.02.25 | SKinno News

▲ Choi Yun-seok, CEO of SK Incheon Petrochem


“The essence of this financial story is that we will secure sustainability based on a distinguished SHE (Safety/Health/Environment) management level and operational competitiveness while also accelerating and fine-tuning low-carbon-based growth strategies,” said Choi Yun-seok, CEO of SK Incheon Petrochem in the recent interview with SKinno News about the company’s plan for 2022. Let’s take a closer look at how SK Incheon Petrochem has been doing to embrace the era of carbon neutrality and become a more eco-friendly enterprise by checking the content below.


Q1. As we have entered the era that emphasizes carbon neutrality and eco-friendliness, it seems like SK Incheon Petrochem is in need of a new business strategy and means of survival. Can you tell us your determinations for 2022?


Over the past 2 years, SK Incheon Petrochem has faced many difficulties due to the COVID-19 pandemic and the erratic business environment. However, thanks to the efforts of our members who sought after SUPEX* under “one heart and one mind,” we were able to overcome these hardships and achieved various improvements and accomplishments in terms of finances and many other aspects.

*SUPEX: “Super Excellent Level,” which means the highest level attainable by human ability


SK Incheon Petrochem responded quickly in the unpredictable market environment, and we established a financial story that contains our strategy for turning low-carbon/decarbonization demands into an opportunity. The essence of this financial story is that we will secure sustainability based on a distinguished SHE (Safety/Health/Environment) management level and operational competitiveness while also accelerating and fine-tuning low-carbon-based growth strategies.


2022 is SK Incheon Petrochem’s “Year of Fulfilling the Financial Story” with our determination to become a leading eco-friendly company that adds value to the environment and society. Our members and I are doing our best to achieve this goal. The future is uncertain, and I’m sure there are countless obstacles we will have to overcome. However, we will make sure that 2022 will become the foundation for sustainable growth through endless challenges and innovations with our members.


▲ Choi Yun-seok, CEO of SK Incheon Petrochem, explains the company’s financial story and vision at the “Dialogue with Staff Members” that was held in May 2021.


Q2. SK has an exceptional operational competitive edge for pre-emptively responding to changes in petroleum/chemical product demands due to eco-friendly changes. What kind of strategies does SK Incheon Petrochem have?


The demand for petroleum products will continue to decrease due to increased use of green energy, such as hydrogen and new renewable energies, and the demand for chemical products is expected to be fairly stable in the mid to long-term. In order to respond quickly to this market environment and generate revenue, it’s imperative to focus on our competence and secure flexibility in operating our product manufacturing facilities. We must stably improve our profitability by maximizing our operational efficiency on top of that. In addition, we must minimize various costs and constantly develop new ways to generate additional revenues.


SK Incheon Petrochem recently became even more grounded in our process safety operations, while also achieving a series of structural improvements related to the implementation of crude oil. We expanded the direct implementation of crude oil and reduced demurrage times by resolving the major obstacle of water depth limitations through joint efforts with the community. Moreover, we also achieved meaningful accomplishments by making an effort to reduce various costs, such as utilities and decreasing waste, and taking part in diverse endeavors for resolving the limitations of process operations. We also made our assets more efficient by reducing our inventory and selling unused land.


The project that we are faced with this year is to achieve perfection in process turnaround (T/A). During this T/A, we will increase facility reliability while simultaneously engaging in projects that can secure cost competitiveness, such as improving energy efficiency. In particular, we will be engaging in strategic projects that will create new revenues in the future, such as the hydrogen business or waste heat recovery, etc. Above all, we will further secure reliability and SHE, which is one of our biggest competitive edges, and perform everything successfully.


Q3. You briefly mentioned the hydrogen business in your last answer. Can you tell us more details about SK Incheon Petrochem’s plans for pushing forward the low-carbon growth strategies?


▲ Choi Yun-seok, CEO of SK Incheon Petrochem (first on the right side), explains the liquid hydrogen production base that will be created inside the factory through a model in March 2021.


The low-carbon growth is incredibly important for SK Incheon Petrochem, which does business based on petrochemicals, and this is the essence of our financial story. In other words, we are going to grow into a new business that goes beyond the limits of the petrochemical business. I believe this is a huge challenge not just for the CEO, but for all of our members.


SK Incheon Petrochem will actively engage in renewable energy projects, such as bio-fuel, waste plastics and waste tire recycling, as the first step toward low-carbon growth. Our plan is to use our existing assets and various competencies and positions that we need for production to achieve this. Second, we are planning to engage in projects that process, regenerate, and recover resources from organic wastes. Lastly, we will pursue technological growth strategies that use AI/DT, such as the digital SHE platform, based on SHE, which is one of our greatest competitive edges.


From these projects, we have also made accomplishments in selling byproduct hydrogen and confirming the potential of the tech biz. Last year, we signed a contract to supply the byproduct hydrogen that is generated in our factories to SK E&S, which is a company that takes part in hydrogen projects within the SK group. As a result, we will be building production facilities on-site to supply 30,000 tons of liquid hydrogen every year to the entire capital area by 2023. This project is expected to become a core part of the hydrogen production cluster that the city of Incheon is pushing forward as a key project. I believe this will help develop the local economy and establish Incheon to become a clean energy city.


We are also planning to fine-tune and improve the feasibility of new projects, such as bio-fuel and plastic recycling, etc., which will lead our company’s eco-friendly future through collaborations and partnerships.


We will secure eco-friendliness and mid to long-term revenues by developing optimized conversion options based on low carbon emissions in our existing businesses. As a result, the company will secure a stable growth foundation for the future and become one step closer to achieving net zero and ESG business management.


Q4. You explained that the company is actively engaging in new tech-based projects, and it sounds quite novel as a growth strategy for a petrochemical company. Can you tell us the significance and how you plan to push these strategies forward?


Sk Incheon Petrochem’s biggest strengths are SHE management competency and AI/digital-based environmental management technology. Over the years, we have invested all of our competencies under a plan that puts our SHE competency and environmental management technology at the core of our growth, and we are proud of the fact that we have the strongest competence out of all the petrochemical companies, both domestically and internationally. We are turning the competence and technologies we have developed over the past 50 years into a new tech-based business integrated with AI/DT to push forward various projects that add value to the environment and society. This is a bold move that probably isn’t possible through conventional thinking.


▲”Mobile Work Permit System (e-Permit)” that is implemented throughout all business sites of SK Incheon Petrochem


In the midst of all this, SK Incheon Petrochem’s proprietary mobile work permit system is advancing and turning into a profit model through external commercialization. We are proud of this because this is a meaningful result that, beyond simply improving the efficiency of SHE management, it spreads our SHE model across the entire petrochemical industry, where safety, health, and environment are the most important issues.


In addition, we are currently working with public institutions to use our intelligent wastewater treatment system, which is another of our main environmental management technologies, as an eco-friendly technology that treats wastewater based on AI and big data. We are also planning to diversify our tech-based projects this year for reducing carbon emissions by actively engaging in organic waste resource recovery projects, etc., using livestock manure, etc.


Q5. The company emphasized an “organizational culture with no fear” to members. Can you explain that in detail?


As I mentioned earlier, SK Incheon Petrochem’s financial story is a great challenge, and I believe it is difficult to guarantee success through traditional efforts. SUPEX, which is SK’s key corporate culture, is an absolute prerequisite to achieve this. Therefore, what I emphasize is an “organizational culture with no fear” and “continuously enhancing the competence of members.” I believe this is the enabler for successfully fulfilling our financial story.


The “organizational culture with no fear” that I emphasize refers to a culture where the members can confidently speak their mind to anyone if they believe it is necessary for the company’s advancement based on mutual respect, and take up challenges without fear of failure. Due to the nature of the petrochemicals industry, there have been strict rules as a safe work environment was paramount in the field, but our aim is to change everything aside from the culture that is necessary to maintain mutual respect and SHE.


▲ Choi Yun-seok, CEO of SK Incheon Petrochem, explains “organizational culture with no fear” to members.


If we can help our members’ competence and potential really blossom here, I believe our financial story can be turned into a reality to secure the company’s sustainable survival and low carbon-based future growth plans. “Continuously enhancing the competence of members” will take on a stronger position as part of the company’s unique identity so that the members of SK Incheon Petrochem can take pride in the company.


As the CEO, I want to do my best so that every staff member’s efforts lead to achievement and create an environment where both the staff and the company can grow together.


Q6. SK Incheon Petrochem has been a key company in Incheon for over 50 years, and it has taken part in various activities to build a social safety net in the region. Can you give us a detailed explanation on this?


SK Incheon Petrochem is working hard to join hands with the local community based on our business philosophy of seeking social values in addition to the company’s economic values.


In 2016, the company signed a “local mutual growth agreement” where we supported 31 billion won over the course of 3 years in 4 key fields of residential environment, education/human resource development, culture/welfare, and safety/environment as a way to enlarge the p-Xylene factory.


We headed a private-and-public joint residential environment improvement project where residents, the local government, and corporations worked together to invigorate old urban areas thanks to this agreement, and we offered support for the region’s sustainable growth. We also took part in a decrepit school improvement project, offered scholarship support, etc. to develop local human resources, and built a 360m protective wall at Bongsu-daero near the company to also improve safety/environmental management level.


Moreover, we take part in home-renovation projects and medical support projects every year through the 1% Happiness Sharing Fund that is funded through donations from a portion of our members’ income, and we are making an effort to build a social safety net.


Despite the spread of COVID-19, we will be engaging in broad and more detailed social contribution activities with the attitude of wanting to overcome difficulties with the local residents. SK Incheon Petrochem has developed and grown by taking on the role of a company with the responsibility of meeting social expectations and demands as a part of the local community, and we will continue to serve these principles as one of our core values.


▲ (Left) A staff member from SK Incheon Petrochem visits and gives gifts to the beneficiary family in Seo-gu, Incheon, for celebrating the 100th house renovated by the Love Home Renovation Project. / (Right) An elderly beneficiary of SK Incheon Petrochem’s Love Home Renovation Project looks at her new kitchen that was nicely repaired.


Q7. Lastly, can you share any last words you want to give to interested parties, the readers of SKinno News, and members?


As I mentioned before, Incheon has been SK Incheon Petrochem’s home for over 50 years, we have contributed to Incheon’s economic growth, and we have grown by supplying energy to the capital area. We continue to do business by understanding that we are growing with the local communities and interested parties. We will do everything we can in this valuable work that will allow everyone to grow together with a sense of pride and responsibility as a key company in the region. We hope for a lot of interest and encouragement from the local community and interested parties.


I know that our members are passionate about overcoming crises and building a great future together. I believe that all our efforts to get through COVID-19 and this tunnel of uncertainty will be worthwhile. SK Incheon Petrochem will overcome this time of hardship with continuous and difficult challenges, such as converting to a low carbon-based business model and evolving with an innovative corporate culture, to become a company that is more trusted and respected by the community. I hope we will all work together to turn 2022 into a year of success.


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