SK E&S to launch London office in view of growth opportunities in Europe

SK E&S Co., the natural gas business unit of South Korea’s SK Group, is preparing to open a business office in London as it sees growth opportunities in Europe in the wake of Russia’s invasion of Ukraine.

The worsening energy crisis in Europe, triggered by Moscow’s suspension of gas exports in retaliation for the European sanctions against the Russian attack on Ukraine, could create a business opportunity for non-European companies such as SK, the company said on Monday.

“In the past, Europe’s gas market operated separately from that of the US and Asia, but things have changed. If you don’t understand Europe, you can’t be a market participant there, let alone a global player,” said SK E&S Vice Chairman and Co-CEO Yu Jeong-joon.

SK E&S, Korea’s top city gas supplier, has largely sought business opportunities in Asia, engaging in the liquefied natural gas (LNG) business with Asian companies. However, the company said the energy market in Europe, the world’s largest economic bloc, is being reshaped amid the protracted Russia-Ukraine war.

“Carbon emissions are not for free. They come with a price tag for the future,” Yu said during an interview for an in-house newsletter. “Carbon pricing is inevitable and will be costlier going forward.”

A TRADING SYSTEM SIMILAR TO EU ETS REQUIRED

He called on the Korean government to create a system similar to the EU emissions trading system (ETS) to encourage companies to actively cut carbon emissions.

“We need to have a system in which efforts to reduce carbon emissions are recognized and byproducts produced while seeking to enhance carbon neutrality are more freely traded,” he said.

The EU ETS is a cornerstone of the EU's policy to combat climate change and its essential tool for reducing greenhouse gas emissions cost-effectively. It is the world's first primary carbon market and remains the biggest one.

SK’s move to open a London office comes as governments and companies worldwide are increasingly adopting a paradigm shift from polluting fossil fuels to clean energy amid tighter environmental regulations.

SK Group, whose energy portfolio ranges from refineries, natural gas and batteries to renewable energy, is widening its business scope to carbon capture and hydrogen businesses.

In September 2021, SK E&S acquired Key Capture Energy LLC (KCE), a US operator of energy storage projects, as the South Korean company aims to expand its presence in one of the world’s largest grid solutions markets.

In May of this year, the company partnered with Australia’s Santos Ltd. to seek joint projects in the carbon capture and storage (CCS) and hydrogen transport and storage sectors.

SK E&S Co-CEO Choo Hyeong-wook said last year that the company aims to turn into an eco-friendly enterprise with a corporate value of 35 trillion won ($30 billion) by 2025 with its business focus on four key sectors – hydrogen, renewable energy, energy solutions and eco-friendly LNG.

Jeong-Min Nam

peux@hankyung.com

In-Soo Nam edited this article.