SK Innovation and SK E&S merge to form largest Asia-Pacific energy company
South Korea’s SK Innovation and SK E&S have officially announced their merger, creating the largest private energy company in the Asia-Pacific region with assets totaling KRW100 trillion (USD72.5 billion). This strategic move aims to enhance portfolio competitiveness, strengthen financial and profit structures, and secure growth momentum in the rapidly evolving energy sector.
Founded in 1962 as South Korea’s first oil refining company, SK Innovation has since broadened its business scope to encompass petrochemicals, lubricants, and oil exploration. The company is now venturing into future energy sectors, including electric vehicle batteries, small modular reactors (molSMRPH), ammonia, and immersion cooling. This strategic diversification has positioned SK Innovation as the largest energy company in South Korea.
Established as a spin-off from SK Innovation in 1999, SK E&S began as a city gas holding company. Today, it is South Korea’s leading private LNG company, having completed the LNG value chain on a global scale. SK E&S is evolving towards a green portfolio, integrating its core businesses—city gas, low-carbon LNG value chain, renewable energy, and hydrogen and energy solutions—to generate synergies and promote sustainable growth.
SK Innovation and SK E㖅S separately held board meetings on July 17 and approved the merger proposal. If the merger plan is approved at their respective shareholders meeting scheduled next month, the merged corporation will officially launch on November 1, 2024.
Park Sang-kyu, CEO of SK Innovation, stated, “The merger of the two companies represents a structural and fundamental innovation aimed at achieving sustainable growth by proactively responding to the changing environment surrounding the energy industry. Through this merger, SK Innovation will grow into a Total Energy Solution Company that leads Korea’s energy industry from the present into the future.”
Choo Hyeong-wook, CEO of SK E&S, added, “This merger will not only strengthen the existing business capabilities of both companies but also secure growth engines for key future energy businesses. Based on the synergies created through the merger, SK E&S will enhance its green portfolio centered on its four core businesses and lead the future energy market.”
Key highlights of the merger
– Comprehensive Portfolio: The merged entity will encompass the entire value chain of both current energy sources such as oil and LNG, and future energy sources including renewable energy, hydrogen, and small modular reactors (SMR), as well as electrification businesses like batteries and energy storage systems (ESS).
– Financial Strength: The combined company aims to achieve an EBITDA of KRW20 trillion (USD14.5 billion) by 2030, driven by synergies in portfolio management, financial structure, and growth initiatives. The merger is expected to mitigate the high profit volatility of the petrochemical business with the stable profit generation capabilities of the LNG, power, and city gas businesses.
– Growth Momentum: By integrating resources and capabilities, the merged company will enhance its competitiveness and profitability in both energy and electrification sectors. This includes combining SK Innovation’s crude oil refining and trading operations with SK E&S’s gas development and LNG trading.
Strategic Goals
– Portfolio Competitiveness: Establish a competitive portfolio across all business sectors.
– Financial Stability: Secure stable profit generation capabilities and external growth in assets and sales.
– Growth Initiatives: Enhance competitiveness and foster new businesses through resource and capability integration.
