S.Korea’s SK Earthon starts oil production in South China

SK Earthon Co., the resources development subsidiary of South Korea’s top energy company SK Innovation Co., began crude production at an oil field in the South China Sea jointly owned by the company and the mainland’s China National Offshore Oil Corp. (CNOOC).

SK Earthon said on Monday the company has recently commenced operations of the Lufeng 12-3 conventional oil field in Block 17/03, which is located in the eastern South China Sea with an average water depth of approximately 240 meters. The main production facilities include one wellhead platform and one newly built 100,000-ton intelligent floating production storage and offloading unit with 13 development wells set to be put into production.

It is expected to achieve a peak production of approximately 29,500 barrels of crude oil per day, more than 1% of South Korea’s daily consumption, in 2024.

“The project marks the first production from an oil field, for which SK Earthon secured operating rights,” its parent SK Innovation said in a statement. “It is expected to contribute to national energy security.”

FROM INITIAL EXPLORATION TO COMMERCIAL PRODUCTION

SK Innovation signed a product-sharing contract for the Lufeng 12-3 project with CNOOC in 2015. The Chinese oil major holds a 60.8% share in the field, while SK Earthon, split off from the parent company in October 2021, holds the rest as the operator.

The wholly owned subsidiary led the entire process of the project from initial exploration to commercial production, according to SK Innovation, which discovered oil on the block in 2018.

South Korea, which provided financial support to the oil development project, is expected to collect loan principal, interests and profits from the field. The world’s fifth-largest oil importer has been offering loan programs to overseas resource development projects of local companies since 1984.

The country’s first private company to join the progam was SK Innovation, which started the overseas energy development project, with its participation in Indonesia’s Karimun oil field in 1983.

SK Earthon is currently working on 10 oil fields with a total capacity of 52,000 barrels a day and four liquefied natural gas in eight countries.

The company is also focusing on the carbon capture and storage (CCS) business based on its expertise in oil development technology.

(Added a new photo)

Write to Hyung-Kyu Kim at khk@hankyung.com
 

Jongwoo Cheon edited this article.