President Chung Chul-khil of SK Innovation.

SK Innovation is turning to Indonesia to counter a cooling Chinese economy, starting by winning a contract for the supply of petroleum products to Pertamina, a state-run oil company in Indonesia, officials of the oil company said recently.

They said the company has a long-term contract with the Indonesia state-run oil company. SK Innovation won a bid to supply oil products to the Indonesian oil company amidst stern foreign competition. But they are reluctant to disclose the volume of oil products they won at the biddings and their figures.

The oil business arm of SK Group has been operating in the S.E. Asian country because of its enormous oil market, which includes a population of 250 million; total GDP ranked 16th largest in the world; and a purchasing power index ranking of 10th — the largest among the countries in S.E. Asia.

But the country’s oil refining capacity is not big enough to refine all of the light oil products needed domestically, and it thus imports 40 percent of that including gasoline, diesel and kerosene.

Korea exported 16.18 million barrels of light oil to Indonesia in the first half of this year, up 34 percent year-on-year with SK Innovation taking up around 90 percent of the light oil exports to the S.E. Asian country.

The oil company has been strengthening its ties with Indonesia in non-oil areas. SK Innovation President Chung Cheol-gil visited Indonesia in May and called on Pertamina for a meeting with the management of the state-run oil company.

The top manager of SK Innovation said after the meeting that the company will expand its oil product export channels to the oil product importing countries in the S.E. Asian region, with Indonesia at the center, by signing strategies with those nations.

SK Innovation already operates a base lube oil plant jointly with Pertamina, and also the oil company sent some of its technicians from its Ulsan Oil Refining Complex in Ulsan, Korea, to help operate oil refineries owned by Pertamina.

Officials of the Korean oil company said China has expanded its oil refining facilities to meet its oil needs, while its economy has been sluggish, hurting exports of oil products from Korea. 

“We had to reduce our dependence on China’s oil market and look for other countries to export our oil products with the focus on Indonesia to exploit its oil market,” the company said. 

SK innovation has been leading Korea’s energy industry for the past five decades. Early on, the company expanded into overseas resource exploration. These efforts have seen tangible results in projects in Vietnam, Peru, Brazil and elsewhere, elevating the company’s global stature in natural resource development. Today, the company participates in 29 blocks located in 16 countries has provided the foundation for us to compete head-on with the world's largest players. 

“Our continuous innovation and R&D efforts have provided us with world-class competencies in the alternative energy sector, and our advanced technologies are now used in the US, Vietnam, China, Japan, Europe and elsewhere,” according to SK Innovation. “Particularly, in the battery business for electric vehicles that we boast the world-class technology, we secured a bridgehead for inroads to the global market by entering into supply contracts with global leading automakers.” 

Carbon capture and storage (CCS) technology, which sequestrate CO2 underground, and CO2 emission reduction methods are now being developed globally. 

In 1957, Dutch assets in petroleum were nationalized, from which Permina was founded as a state-owned oil monopoly headed by Lieutenant-General Ibnu Sutowo. 

 Permina distributed oil for the entire archipelago.

In 1968, to consolidate oil and gas industry for its management, exploration, marketing and distribution, Permina and Pertamin merged and became PN. Pertamina.

A view of the SK Building near Gwanghwamun Intersection, downtown Seoul, where SK Innovation has its offices.(Photos:SK Group)