SK Earthon Achieves Successful Crude Oil Production in South China Sea Block

Starting September, crude oil production from offshore blocks in the South China Sea
Daily output up to approximately 29,500 barrels

Location of the LF (Lufeng) 12-3 oil field within the '17/03 Block' in the northeastern offshore area of the South China Sea, where SK Earth On, a resource development subsidiary of SK Innovation, has started crude oil production. Photo by SK Earth On

SK Earth On, a resource development subsidiary of SK Innovation, is starting crude oil production in an offshore block in the South China Sea. This marks the first successful crude oil production among the blocks operated by SK Earth On. It is expected to contribute to domestic energy security through resource acquisition.

On the 25th, SK Earth On announced that it will begin crude oil production next month at the LF (Lufeng) 12-3 oil field within the '17/03 block' located in the northeastern offshore area of the South China Sea. The 17/03 block is about 300 km away from Shenzhen City, China. Its size is equivalent to 15 times the area of Yeouido. The daily production volume is approximately 29,500 barrels at peak production, which exceeds 1% of South Korea’s daily oil consumption.

SK Earth On entered the offshore block business in the South China Sea as the first domestic private company by signing a block contract with the Chinese state-owned oil company CNOOC (China National Offshore Oil Corporation) in 2015. After securing independent operating rights for the block, it conducted basic exploration activities such as geological surveys and geophysical exploration, successfully discovering crude oil during exploratory drilling in 2018. Following development stages including reservoir evaluation and construction of production facilities, it finally reached crude oil production.

This crude oil production is significant as it is the first case where crude oil was discovered, developed, and produced through an independently operated exploration project. SK Earth On successfully led the entire process from initial exploration to production using its own technological capabilities.

In particular, to reduce carbon dioxide emissions generated during the crude oil production phase, SK Earth On incorporated production facility designs from the planning stage that include waste heat recovery from power generator exhaust gases and electrification of equipment. Additionally, it is reviewing the introduction of LNG-fueled vessels and the use of renewable energy power, and plans to continue efforts to reduce carbon dioxide emissions by applying these measures in the future.

The 17/03 block is a successful case of the government’s energy loan support program. Since 1984, the government has operated a loan support system targeting resource development projects to support domestic companies’ overseas resource development businesses. Once production begins in the 17/03 block, SK Earth On will repay the principal and interest of the loans received from the government, and after the repayment is completed, it will share a portion of the profits with the government in the form of a special burden charge for a certain period.

SK Earth On, spun off from SK Innovation in 2021, is pursuing growth based on two pillars: oil development business and green business. SK Innovation entered overseas resource development as the first domestic private company in 1983 by participating in the Indonesia Karimun block. Currently, SK Earth On participates in and manages 10 blocks and 4 LNG projects across 8 countries, with a production volume of about 52,000 barrels per day (oil equivalent) from the 10 blocks. In the green business sector, it is promoting CCS (Carbon Capture and Storage) projects based on exploration technology accumulated through oil development, focusing on discovering carbon dioxide storage sites by participating in various domestic and international projects.

Myungseong, President of SK Earth On, said, "Since entering overseas resource development as the first domestic private company in 1983, we have been able to independently succeed in crude oil production based on 40 years of accumulated technical know-how. We will continue to invest in CCS projects alongside oil development to achieve the goals of carbon neutrality and growth."

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