GS Caltex Chairman Hur Dong-soo said it is too early to talk about GS Energy's initial public offering because the new energy affiliate of the GS Group launched in January still has a long way to go to be a full-fledged energy company.

The energy firm will take charge of new and recycled energy, replacement energy, and other new growth engines in the energy sector in addition to those energy related businesses from GS Caltex including fuel battery production, bio-diesel, and energy-related R&D.

As the 50-percent stakeholder of GS Caltex, the new energy company is expected to take over more energy related businesses of GS Group affiliates such as Haeyang City Gas, Sorabol City Gas, GS Power, GS Fuel Cell, GS Nanotec, GS Bio, and GS Eco-Metal. Ra Wan-bae, president of GS Caltex, has been promoted to vice chairman and has taken over the helm of GS Energy to show the importance of the new energy affiliate.

Chairman Hur said the new energy affiliate will not only engage in the exploration of energy sources, but it will also enter petrochemical and other strategic oil refining businesses if the right ones come along.

The new energy firm's main job will be the exploration of energy sources overseas. GS Caltex can't do it, as it will be in competition with Caltex, the equal partner of GS Caltex in Korea, which is a major oil company engaged in oil exploration overseas.

Vice Chairman Ra said GS Energy will not have to ask for approval from Chevron Oil for its overseas oil exploration projects, although GS Caltex must seek Chevron's approval as Chevron is a major shareholder of Caltex Oil in the United States. GS Energy is at the starting stages of its operation and is ready to make huge investments in energy related areas in four to five years in order to reach its goal of 40 trillion won in annual turnover.

Chairman Hur said the company has been looking seriously at China, Southeast Asia, and Australia, among other countries, in its overseas projects, although they are still in the planning stages.

GS Caltex has a number of gas stations in such cities as Qingdao and Yentai, operating them as convenience stores, car washes, and car repair shops. The oil refiner also has a lube oil subsidiary in India. GS Caltex's oil exploration projects in Cambodia, Thailand and Vietnam are likely to be taken over by GS Energy.

Hur said GS Caltex's fourth heavy oil cracking facility will be completed in 2013 and the oil refiner will continue to invest in profitable petrochemical facilities with high profit margins and a competitive edge. When the heavy oil cracking center, costing 1.1 trillion won, is completed, the oil refinery will be able to turn out 268,000 barrels of petrochemical products daily, making it the largest in Korea.

Chairman Hur said large projects that GS Energy will take on can be undertaken as joint ventures and when its own projects are going well, the company will pursue an initial public offering, which will take time.

Industry sources said GS Energy will supply funds to GS Caltex since Chevron, a U.S. oil major, holds a 50-percent stake in the oil refiner and it would have to go through a complicated process to offer its shares on the Korea Exchange.

GS Energy is capitalized at 250 billion won with total assets of 4.38 trillion won. GS Holdings holds a 100 percent stake in the company, which in turn holds a 50 percent stake in GS Caltex.  nw