SK E&S Collaborates with Beijing Gas Group on LNG and Hydrogen Projects

Vice Chairman Yoo Jeong-jun, Vanguard of Private Energy Diplomacy

Cooperation in Blue and Green Hydrogen Production and Fuel Cell Power Generation

From the right, Yujeongjun, Vice Chairman and CEO of SK E&S, Munsangyo, Head of SK E&S Liquefied Natural Gas (LNG) Division, Chao Weijun, Deputy General Manager of Beijing Gas Group, and Li Yaran, Chairman of Beijing Gas Group (Co-Chairman), are seen commemorating the signing of the 'Strategic Cooperation Agreement (SCA) in LNG and Hydrogen Business' at the World Gas Conference 2022 (WGC 2022) held in Daegu on the 25th. (Photo by SK E&S)

[Asia Economy Reporter Moon Chaeseok] Yoo Jeong-jun, Vice Chairman and CEO of SK E&S, has opened the door to cooperation in liquefied natural gas (LNG) and hydrogen with Beijing Gas Group, the largest natural gas operator in North China. He took the lead in 'private energy diplomacy.'

SK E&S announced on the 26th that Vice Chairman Yoo attended the World Gas Conference 2022 (WGC 2022) and signed a Strategic Cooperation Agreement (SCA) with Beijing Gas Group in the fields of LNG and hydrogen business. The signing ceremony, held at the WGC venue the previous afternoon, saw Vice Chairman Yoo and Li Yaran, Chairman of Beijing Gas Group, sign the contract and exchange greetings. Beijing Gas Group, under the Beijing municipal government, operates approximately 29,900 km of natural gas pipelines in Beijing and surrounding areas, supplying natural gas to about 7.13 million households.

Through this SCA, the two companies agreed to establish a strategic partnership in LNG and hydrogen business sectors within China. They plan to first explore joint cooperation opportunities to expand the LNG value chain. To this end, they will share operational know-how of key assets such as LNG terminals owned by both parties in China. Additional cooperation related to LNG import and natural gas sales will also be pursued. They will share long-term portfolio strategies for future LNG business.

Regarding hydrogen, they agreed to strengthen cooperation across the entire value chain from production to demand securing. Hydrogen production will be promoted by producing blue hydrogen through the application of CCUS (carbon capture, utilization, and storage) technology at facilities such as the Tianjin LNG terminal under construction by Beijing Gas Group. They will also consider producing green hydrogen linked to new renewable energy projects. The possibility of blending hydrogen into natural gas pipelines owned by Beijing Gas Group and constructing hydrogen fuel cell power plants will be jointly explored. They will promote the transition of Beijing municipal and Beijing Gas Group-operated vehicles to hydrogen vehicles and seek ways to convert Beijing Gas Group's compressed natural gas (CNG) and LNG refueling stations into hydrogen refueling stations.

After signing the SCA, the two companies will form a joint working group to identify specific projects. SK E&S explained that this SCA is significant as it establishes a foothold to expand influence in the rapidly growing Chinese natural gas and hydrogen markets by strengthening cooperation with Beijing Gas Group, a key local business partner in China.

Vice Chairman Yoo also participated in the WGC keynote session titled 'Asia's Gas Industry Towards Net Zero Goals' held that morning alongside Chairman Li Yaran. Li Yaran also serves as Vice Chairman of the International Gas Union (IGU), which hosts the WGC event, and Executive Chairman of the China Gas Association. Yoo emphasized, "'Net zero' is a global agenda not limited to the energy industry," adding, "The energy industry must evolve and develop while maintaining a long-term balance among three key factors: economic feasibility, security, and sustainability to achieve net zero." He predicted that natural gas will play an important role in the energy transition era. He stressed, "Coal-fired power accounts for 60-70% in China, India, and Indonesia, and gas will play a crucial role in the transition process, as well as in solving the intermittency issues of renewable energy." Intermittency refers to the characteristic of renewable energy where power generation fluctuates widely depending on weather conditions, causing supply instability.

He argued, "Natural gas will serve as a 'gateway' that must be passed through regardless of the energy mix pursued." Vice Chairman Yoo also acknowledged, "Despite this role of gas, there is clearly a challenge to overcome its limitations as a fossil fuel." He explained that actively utilizing various carbon reduction methods such as blue hydrogen, CCUS for direct reduction, and offset reduction using carbon credits can open new business opportunities.

Vice Chairman Yoo introduced SK Group and SK E&S's carbon reduction plans. He stated, "SK Group plans to reduce 2 hundred million tons of carbon by 2030, which is 1% of the global carbon reduction target of 21 billion tons." He added, "SK E&S is developing a CCS project with a scale of 10 million tons utilizing the Bayu-Undan gas field in Timor-Leste and is investing in the world's largest 12 million-ton-scale CCS project in North America to contribute to greenhouse gas reduction." He continued, "Despite the unprecedented uncertainties caused by the COVID-19 pandemic and the Russia-Ukraine conflict, the energy mix will ultimately evolve long-term towards net zero," emphasizing, "Especially Asia, as the market with the greatest potential for energy transition, must move a half-step faster." He also said, "'Carbon-neutral gas' can serve as a 'guiding star' rather than a reef in the 'long journey to a new Age of Discovery.'"

This content was produced with the assistance of AI translation services.