SK Earthon to explore oil block off Malaysian coast

South Korea’s SK Earthon Co., an energy and petroleum unit of SK Innovation Co., and Malaysia's Petroleum Sarawak Exploration & Production (PSEP) have won a bid to develop and operate an exploration block off the coast of Malaysia.

The Korean firm and PSEP on April 22 signed a production sharing contract (PSC) for Block SK427 with Malaysia’s state-run Petroleum Nasional Berhad (PETRONAS). SK Earthon submitted a bid with PSEP to the Malaysia Bid Round last year, which was co-hosted by Malaysia Petroleum Management (MPM) and PETRONAS.

Under the contract, SK Earthon acquired 85% of the participating interests in the exploration block, off the coast of Sarawak, Malaysia, and will be responsible for the exploration, development and production from the block. PSEP, the Sarawak-owned oil and gas company, holds the remaining 15% of the participating interests to conduct exploration.

The final decision on the development and production will be made by exploration results over the next four years, the Korean firm and PSEP said.

"By leveraging technology and capabilities we built when we operated the nearby exploration block in Vietnam, we will maximize the prospects of the Malaysian block, which will serve us as a bridgehead for our mid- and long-term business expansion in the Southeast Asian country,” SK Earthon said in a statement.

The shallow-water block is located in a proven hydrocarbon system and has promising hydrocarbon potential to be unlocked, PETRONAS said. Some significant hydrocarbon discoveries were made last year in the Balingian province near the block, Malaysia's wholly owned energy group added.

The Korean firm and PETRONAS share the same aspiration about the need for carbon reduction and will find opportunities for Carbon Capture and Storage (CCS), a technology for capturing carbon dioxide before it enters the atmosphere, transporting and storing it, SK Earthon said.

SK Innovation, SK Group’s energy and chemical unit, is holding interests in 11 blocks and four liquefied natural gas (LNG) projects in eight countries producing about 51,000 barrels of oil and natural gas a day. As of end-2020, its reserves were 380 million barrels of oil and natural gas.

SK Innovation launched SK Earthon last October in a corporate restructuring aimed at sustainable growth. SK Earthon Chief Executive Myeong Seong said the new company will build an environmentally friendly green portfolio to minimize carbon emissions. Myeong is an energy and petroleum veteran with some 27 years' work experience in the oil business.

Write to Kyung-Min Kang at kkm1026@hankyung.com
Jihyun Kim edited this article.