SK Earthon Secures Second Oil Field Exploration Contract in Malaysia

SK Earthon Co., the exploration and production (E&P) arm of South Korea’s SK Innovation Co., is advancing its global energy strategy with a new exploration opportunity in Malaysia. This move follows its initial oil field exploration success in the Southeast Asian country two years ago. On Sunday, SK Innovation announced that SK Earthon has secured the rights to explore and develop the Ketapu Cluster, an oil field off the coast of Sarawak, Malaysia. The company has signed a production-sharing contract with Petronas, Malaysia’s state-owned energy giant.

Under the agreement, SK Earthon will hold an 85% stake in the Ketapu Cluster as the operator, with Petroleum Sarawak Exploration and Production (PSEP), Malaysia's state-run oil and gas company, owning the remaining 15%. The Korean firm anticipates starting crude oil and natural gas production from the Ketapu Cluster by 2031, following exploration and appraisal drilling to assess the field's commercial viability. This new project represents SK Earthon’s second exploration venture in Malaysia. The company previously won rights to explore the SK427 block in April 2022, and it plans to explore both fields concurrently to expedite discovery and production.

The Ketapu Cluster and SK427 block are projected to be more oil-rich than the South China Sea field from which SK Earthon began production in September last year. The 17/03 block in the South China Sea is expected to yield approximately 50 million barrels of crude oil. With this new acquisition, SK Earthon is expected to further boost its contributions to SK Innovation’s earnings. In the first half of this year, SK Innovation’s energy E&P division reported an operating profit of 296.5 billion won ($221.4 million), achieving 80% of last year’s total profit, with sales reaching 742 billion won.

The 17/03 block is SK Earthon’s first successful oil field project using its proprietary technology. In November of last year, the company made a crude oil discovery in an offshore block located southeast of Vietnam, following four years of exploration. The crude oil deposits in the 16-2 block are located in the Cuu Long Basin, a highly promising area for oil reserves.

These recent exploration projects and discoveries are expected to solidify SK Earthon’s position as a major player in the energy resources E&P sector in China and Southeast Asia. Since entering the industry in 1983, SK Earthon has grown to produce an average of 57,000 barrels of crude oil and natural gas per day from 10 oil blocks and three liquefied natural gas (LNG) projects across eight countries.

SK Earthon is also focusing on enhancing its environmentally friendly energy portfolio to reduce carbon emissions. The company aims to increase its green energy products to 70% of its business portfolio by 2025, up from 30%. As part of this strategy, SK Earthon is actively involved in carbon dioxide storage exploration, including a recent license acquisition for a carbon dioxide storage field in Block G-15-AP off Western Australia. The company is currently engaged in 10 carbon capture and storage (CCS) projects.