MIRA INFORM REPORT

Report Date :

18^th November, 2006

IDENTIFICATION DETAILS

Name :	S K CORPORATION

Registered Office :	99, Seorin-dong, Jongno-gu, SEOUL, KOREA

Country :	Korea

Financials (as on) :	30.09.2006

Date of Incorporation :	13.10.1962

Legal Form :	Listed Company

Line of Business :	Manufacture of Lubricating Oils and Greases

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Good

Payment Behaviour :	Regular

Litigation :	Clear

Basic Information

Company Name	SK Corporation
Address	99, Seorin-dong, Jongno-gu, SEOUL, KOREA
Building	SK Bldg.
Zip Code	110-728
Tel	+82-2-2121-5114
Fax	+82-2-2121-7001
Website	www.skcorp.com
Ulsan Complex	110, Gosa-dong, Nam-gu, ULSAN, KOREA
Tel	+82-52-270-2147
Fax	+82-52-270-2145
SK R&D CENTER	140-1 Woncheon-dong, Yuseong-gu, Taejeon, Korea
Tel	+82-42-866-7301
Fax	+82-42-866-7302
SK Jincheon Compounding Plant	690, Kwanghyewon-Li, Kwanghye-Myun, Jincheon-Gun, Chungcheongbuk-Do 365-831 Korea
Tel	+82-43-535-5712
Type	Export/Import
Industry	Petroleum Refineries
Main Business	Diesel, Gasoline, Lubricant, Ethylene, Polymer, Oil Refining, Petrochemical
Sub Business	Manufacture of Lubricating Oils and Greases
Established	10/13/1962

Detailed Products

Activity	Detailed Products (UNSPSC)
Sell	Kerosene(15101502)
Sell	Liquified petroleum gas(15111510)
Sell	Lubricating preparations(15121500)
Sell	Engine oil(15121501)
Sell	Gear oil(15121503)
Sell	Transmission oil(15121508)
Sell	Gasoline or Petrol(15101506)
Sell	Brake oil(15121509)
Sell	Grease(15121902)
Sell	Chemistry reagents or solutions(41116105)
Sell	Aromatic or heterocyclic compounds(12352005)
Sell	Additives(12160000)
Sell	Elastomers(13101700)
Sell	High Density Polyethylene HDPE(13102017)
Sell	Thermoplastic plastics(13102000)
Sell	Polypropylene PP(13102022)
Sell	Propylene(15111503)
Sell	Hydraulic oil(15121504)
Sell	Styrene butadiene SBR(13101705)
Sell	Diesel fuel(15101505)
Sell	Organic derivatives and substituted compounds(12352100)
Sell	Medium Density Polyethylene MDPE(13102019)
Sell	Aromatic or heterocyclic compounds(12352005)
Sell	Resins(13111000)
Sell	Chemistry reagents or solutions(41116105)
Sell	Aviation fuel(15101504)
Sell	Asphalt(30121601)

Others

Name	Shin Heon-Cheol
Address	-
Date of Birth	08/23/1945
Title	President & CEO
Sex	Male
Nationality	Korean
Capital	653,417,340,000 KRW
Employees	5,077
Formation	Listed Company (KSE : 003600), A company of SK Business Group

Management

Job Description	Title	Name	Nationality	Date of Birth	Education
Chairman & CEO	Mr.	Chey Tae-Won	Korean	1960-12-03	Chicago University
President & CEO	Mr.	Sin Heon-Cheol	Korean	1945-08-23	Yonsei University
Vice President	Mr.	Kim Joon-Ho	Korean	1957-08-28	Korea University
Director	Mr.	Han Young-Suck	Korean	1938-08-24	University of California
Director	Mr.	Cho Soon	Korean	1928-02-01	University of Berkeley
Director	Mr.	Nam Dae-Woo	Korean	1938-06-20	Seoul National University
Director	Mr.	Oh Se-Jong	Korean	1943-06-08	University of Berkeley
Director	Mr.	Kim Tae-Yoo	Korean	1951-03-20	University of Colorado
Director	Mr.	Seo Yoon-Suck	Korean	1955-01-03	University of Texas
Director	Mr.	Kang Chan-Soo	Korean	1961-11-23	Wharton School

Financials

Unit: KRW

Year	Sales	Assets	Net income
2005	21,914,582,137,000	17,509,207,571,000	1,686,496,001,000
2004	17,406,063,222,000	14,859,953,269,000	1,640,738,327,000
2003
2002

Financial Description

Unit: KRW

Authorized Capital

2,000,000,000,000

Paid-Up Capital

653,417,340,000

Total Issues Shares

130,683,468

Balance Sheet Unit : Thousand Korean Won

As of 09/30/2006

As of 12/31/2005

As of 12/31/2004

Total Assets

19,410,850,466

17,509,207,571

14,859,953,269

Current Assets

6,174,660,973

6,372,253,113

4,321,525,837

-Quick Assets

3,664,983,766

4,262,979,489

2,717,520,147

-Inventories

2,509,677,207

2,109,273,624

1,604,005,690

Fixed Assets

13,236,189,493

11,136,954,458

10,538,427,432

-Investment

7,712,288,868

5,753,624,095

4,845,368,724

-Tangibles

5,458,013,288

5,321,413,798

5,616,586,947

-Intangibles

65,887,337

61,916,565

76,471,761

Total Liabilities

10,966,294,331

9,398,646,601

8,175,304,593

Current Liabilities

6,149,174,397

5,278,413,869

4,503,519,647

Fixed Liabilities

4,817,119,934

4,120,232,732

3,671,784,946

Capital Stock

653,417,340

650,643,340

Capital Surplus

3,975,611,463

3,975,393,193

3,965,231,537

Profit Surplus

4,615,263,349

3,622,218,535

2,155,283,991

Capital Adjustment

(-)799,736,017

(-)140,468,098

(-)86,510,192

Total Equity

8,444,556,135

8,110,560,970

6,684,648,676

Liab. & Shareholder’s Equity

19,410,850,466

17,509,207,571

14,859,953,269

Income Statement Unit : Thousand Korean Won

As of 09/30/2006

As of 12/31/2005

As of 12/31/2004

Sales

17,541,042,867

21,914,582,137

17,406,063,222

Cost of Sold Goods

15,756,951,104

19,589,510,867

14,711,967,420

Gross Profit

1,784,091,763

2,325,071,270

2,694,095,802

Selling & Admin. Expenses

797,521,354

1,120,169,347

1,073,605,373

Operating Income

986,570,409

1,204,901,923

1,620,490,429

Non-Operating Income

1,379,285,816

1,871,107,496

1,584,476,516

Non-Operating expenses

735,972,929

865,906,984

919,096,518

Ordinary Income

1,629,883,296

2,210,102,435

2,285,870,427

Special Income

Income Before Taxes

1,629,883,296

2,210,102,435

2,285,870,427

Income Taxes Expenses

397,193,938

523,606,434

645,132,100

Net Income

1,232,689,358

1,686,496,001

1,640,738,327

Bank Details

Hana Bank

Corporate Registered No.

110111-0022816

Business Registered No.

116-81-02054

Permit & Licenses

11/1993 ISO 9001

Shareholder Position

Name	Shares	%
SK C&C	14,365,127	11.01
Templeton Asset Management, Ltd.	7,803,260	5.98
Capital	6,452,920	4.95
Others	102,062,161	78.06
Total	130,683,468	100.00

Company History

2005. 12. Finalized Agreement to Acquire Inchon Oil Refinery

2005. 11. Opened Environmentally Friendly Ultra-Low Sulfur Diesel Facility

2005. 9. Awarded the 6th Grand Prize in Auditing

2005. 8. YKP3089 IND Approval

2005. 7. Export of World’s First APU Technology

2005. 6. Selected as a “Good Corporate Governance Corporation”

2004. 10. SK China Holding Co.,Ltd Established

2004. 9. Second Lubricant Base Oil Plant Completed .

2004. 7. ' SK Angels ' Kicks off

2004. 4. Breaking Ground at Ulsan Grand Park

2003. 12. Participated in of the Gwangyang LNG Thermal Power Plant construction project with BP (British Petroleum).

2003. 10. - Officially signed a Petroleum Sharing Contract of North East Madura I Block, Indonesia, with the Indonesian government.

- Developed YKP1358, a new drug candidate for treating schizophrenia and obtained U.S. FDA? IND (investigational new drug) approval, following YKP 10A for treating depression and YKP 509 for treating epilepsy.

Commenced production of crude oil from Su Tu Den Oilfield in Vietnam (The company, along with The Korea National oil Corporation, has an equity stake in The oilfield.)

2003. 7. Signed a contract with SK Chemical for R&D for P.O. (Propylene Oxide) manufacturing technology, using hydrogen peroxide.

2003. 6. Became the second company in the world following Dow Chemical of the U.S. to develop RT, a next-generation material for hot water/heating pipes. The local corporation in the U.S. had it certified as a new material.

2003. 4. Advanced into the packing material market in China through establishment of a joint venture with Zhejiang Shenxin Packaging Co., Ltd. for production of agricultural chemicals using self-developed barrier resins in Hangzhou, Zhejiang Province.

2003. 3. Selected as a model business for voluntary compliance with the fair trade rules by the Korea air Trade Association

2002. 12. Johnson & Johnson selected SK Corporation's antidepressant YKP581 as a clinical candidate.

2002. 11. - Establishment of SK Corporation's branch in Zhaoging City, Guangdong Province, China, for the production and sale thereat of its specialty polymer products (Zhaoging A. P. Compounding Facility)

- Establishment of SK Bio-Pharmaceutical Tech. (Shanghai) Co., Ltd., which broadened SK Corporation's Korea-U.S.-China pharmaceutical R&D network

2002. 10. Celebration of SK Corporation's 40th foundation anniversary

2002. 8. Establishment of International Trading (Shanghai) Co., Ltd. as a branch of SK Corporation in China to launch the sale thereat of the company's polymer products

2002. 7. - Launch of SK Corporation's ERP system (named "e-SK")

- Sale of SK Corporation's holding equity in SK Telecom and overseas issuance of SK Telecom's stocks amounting to KRW1.7 trillion (DRs, EB, etc.)

2002. 4. - Sale of SK Corporation's catalyst manufacturing technology to the world-renowned catalyst provider, Zeolyst International Opening of The first phase of The Ulsan Grand Park

2002. 3. Restructuring of our organization towards a market-oriented direction (establishment of our Energy & Marketing Business Unit)

2001. 12. Telematics(entrac) businesses launched

2001. 10. ZIC XQ, a 100% synthetic highend engine oil, supplied; SK Corp. named customer satisfaction No.1 and brand power No. 1 in surveys by major consumer reports

2001. 9. OK Cashbag Coupon Service introduced

2001. 7. Upgraded SK Enclean supplied

2001. 5. World's first commercialization of coke-reducing technology by on-line coating; major oil discovery in Block 15-1 Vietnam

2001. 3. - Technology licensing business applying intangible assets activated (amount of orders received KRW 60 billion in FY 2001)

Polluted soil purification technology allied with Tefra Tech of The United States

Plant operation technology licensed in Taiwan, Ghana, and Kuwait

Diesel exhaust filtering technology licensed in Japan

- Development of Korea's first microorganism-activated VOC (Volatile Organic Compound) bio-filter

2001. 2. Developed Korea's DeNox-SCR catalyst (supplies previously depended entirely on imports)

2001. 1. NeTruck, a business providing transport and logistics information for truck drivers and owners, launched.

2000. 11. Strategic alliance with U.S. Johnson & Johnson for antidepressant (YKP10A)

2000. 1. Opened the largest hub site in domestic -OK Cashbag.com

1999. 11. Moved to new Company building

1999. 6. Strategic alliance with U.S. Johnson & Johnson for anti-epileptic (YKP509)

1999. 3. Started OK Cashbag accumulation type discount service

1999. 1. Inaugurated gas specializing SK-Enron Co., Ltd.

1998. 9. Obtained KOLAS (Korea Laboratory Accreditation Scheme) certification from National Institute of Technology and Quality based in Korea.

1997. 10. Changed company name into SK Co., Ltd. from SK Yukong.

1997. 6. SK E&P Co. established (Houston, USA).

1997. 3. - Operation of No.2 Synthetic Resin manufacturing facility (annual production 320,000 tons)

- No. 2 para-xylene plant started up (300,000 tons/yr.)

1997. 1. No. 2 para-xylene plant started up (300,000 tons/yr.)

1996. 10. - No.5 atmospheric distillation unit started up (200,000 bpd). Gross capacity: 810,000 bpd.

- No.5 middle distillation unit started up (60,000 bpd).

1996. 7. Crude oil production began at 8th Mine of Peru.

1995. 10. Lubricating base oil plant started up (3,500 bpd).

1995. 9. No.4 middle distillation unit started up (50,000 bpd).

1995. 5. SK R&D center established.

1994. 11. Commercial crude oil production commenced at North Zaafarana Concession in Gulf of Suez, Egypt.

1994. 6. Korea Mobile Telecom acquired.

1993. 11. ISO 9001 certification obtained for all products and processes of 7 business lines.

1992. 11. No.1 Heavy oil, sulfuric acid eliminated (daily production 30,000 barrels), Resolving facility (daily production 30,000 barrels)

1991. 5. No. 4 atmospheric distillation unit started up (200,000 bpd).

1990. 8. Polypropylene plant started up (150,000 tons/yr.).

1990. 5. Para-xylene plant started up (200,000 tons/yr. of para-xylene, 50,000 tons/yr. of ortho-xylene).

1990. 1. Cyclohexane plant started up (100,000 tons/yr.).

1989. 12. - No.2 Ethylene plant was started up (400,000 tons/yr)

- No.2 Butadiene extraction plant was started up (73,000 tons/yr).

1988. 1. Started to import crude oil explored in the Malibu continental shelf block of Yemen.

1987. 5. Yukong Elastomer Co., Ltd. was established.

1985. 12. New aromatic complex started up (400,000 tons/yr)

1985. 11. Increased oil refining capacity by remodeling the upper pressure distillation facility (345,000pbd).

1985. 11. Completed Ulsan R&D Institute.

1985. 5. Total refining capacity was increased to 345,000 bpd by expanding existing atmospheric distillation units.

1984. 11. Yukong Co., Ltd. stock was listed on the Korea Stock Exchange Market.

1982. 7. The company name was changed to "Yukong Co., Ltd." from Korea Petroleum Corporation.

1980. 12. SunKyong Co., Ltd. acquired the management right in accordance with government privatizing policy of the government owned company.

1980. 8. Gulf's 50% equity share and management right were acquired by SunKyung Co., Ltd.

1980. 3. Expanded lubricating oil mixing facility (currently daily production 4,500 barrels)

1978. 3. Naphtha cracking center expanded to 155,000 tons/yr. of ethylene.

1974. 6. No. 2 atmospheric distillation unit expanded to 110,000 bpd.

1973. 3. Naphtha cracking center started up (100,000 tons/yr. of ethylene).

1972. 10. No.3 atmospheric distillation unit started up (115,000 bpd).

1972. 9. Pipeline connecting Ulsan Refinery and Taegu completed.

1970. 6. 50 percent equity share and management rights acquired by Gulf Oil Corp.

1970. 5. Aromatic plant started up (216,000 tons/yr.).

1968. 12. Lubricating oil blending plant started up (550 bpd).

1968. 4. No. 2 atmospheric distillation unit started up (60,000 bpd).

1967. 5. No. 1 atmospheric distillation unit expanded to 55,000 bpd

1964. 4. No. 1 atmospheric distillation unit started up (35,000 bpd).

1962. 10. Korea Oil Corp. established.

Products, Technologies, Services Description

Main Products & Services

Energy

Chemicals

Resources & International Business

Technology Service

Total service for Drivers

Life Science

Organization Structure

Customers

KEPCO

Korea Army

Suhyup

The subject supplies oil for airplanes and for US Army in Korea.

Competitors

GS Caltex

S-Oil

Hyundai Oil

SK Incheon

Related Parties (Subsidiaries, Joint-Venture & Affiliates)

Affiliates	SK Networks Co., Ltd. http://www.sknetworks.co.kr SK Chemicals http://www.skchemicals.com SKC http://www.skc.co.kr/skhp/en/index.jsp SK E&S http://www.sk-enron.com/sk/english/company/main.jsp SK Gas http://www.skgas.co.kr/engskgas/e_main.jsp SK Pharma http://www.skpharma.com SK Telelcom http://www.sktelecom.com/eng/index.html SK Telink http://www.sktelink.com/english/index.html SK Telesys http://www.sktelesys.com/english/company/main.htm SK C&C http://www.skcc.com/eng/ SK Engineering & Construction http://www.skec.com/index.asp SK Shipping http://www.skshipping.com/jsp/eng/index.jsp Sheraton Grande Walkerhill http://www.walkerhill.com/eng/index.html SK Securities http://www.priden.com
Liaison Office
Overseas Branch
Join Venture	The subject searches and develops Oil with the below companies. Egypt-Pico Argentina-Pluspetrol USA-Devon Energy Vietnam-PetroVietnam Italy-ENI China-Petro China
Operative Enterprise	USA CHEVRON RESEARCH CO. U.S.A UNOCAL CORP. U.S.A Monsanto Enviro-Chem TPA Monsanto Envior-Chem Nova chem. Mitsu Chem Montell UOP INC. U.S.A CHEVRO RESEARCH CO. IFP CELGENE CORPORATION Germany Edeleanu Japan NIPPLON ZEON Patra Niaga AXENS Hunt Oil Samsung Corporation SK Australia Pty. Ltd. E'MAX Ortho-McNeil Chronar Int'l Finance Celegen Corporation Monsanto Envior-Chem Chevron Research Co.

Overseas Office

SK Energy & Chemical, Inc. Custom Manufacturing Service

Address : 22-10 Rt. 208, Fair Lawn, NJ 07410, USA

Tel : 1-201-796-4288

Fax : 1-201-796-2278

E-mail : sschang@skcorp.com

website : www.skcms.com

SK Energy & Chemical, Inc. Bio-pharmaceutical Business

Address : 140A New Dutch Lane, Fairfield, NJ 07004, USA

Tel : 1-973-227-3939

Fax : 1-973-227-4488

E-mail : sschang@skcorp.com

website : www.skbp.com

SK USA, Inc.

Address : 400 Kelby Street 17th Floor, Fort Lee, NJ 07024, USA

Tel : 1-201-613-8000

Fax : 1-201-613-8040

E-mail : skusa@skcorp.com

SK E&P COMPANY

Address : 1300 Post Oak Blvd., Suite 910 Houston, TX 77056 USA

Tel : 1-713-341-5822

Fax : 1-713-871-1580

E-mail : dongschoi@skcorp.com

SK Corporation Sucursal Peruana

Address : Av. Victor Andres Belaunde 147 Via Principal 155, Office 1402, Edificio "Real Tres" San Isidro , Lima 27 Peru

Tel : 51-1- 421-3787

Fax : 51-1- 421-3783

E-mail : sijonglim@skcorp.com

SK Energy Asia

Address :#4 Shentonway, #11-02 SGX Centre Two Singapore 068807

Tel : 65-6220-1266 / Fax : 65-6221-1225

e-mail : jinhur@skcorp.com

SK Corporation Beijing Representative Office

Address : 7th floor , Tower-B, JIACHENG Bldg., XiaGuang-Li No.18 DongSanHuanNorth-Road, ChaoYang District, Beijing 100027, China

Tel : 86-10-5920-5500

Fax : 86-10-5920-5522

E-mail : Beijing@skcorp.com

SK Lubricants (China)Co.,Ltd.

Address : Unit 413, Office Tower 2, Henderson Center, #18 Jianguomen Nei Avenue, Dongcheng District,

Beijing 100005 China

Tel : 86-10-6518-5818(ext. 601)

Fax : 86-10-6518-5817

e-mail : sgjeon@skcorp.com

SK (China) Holding Company Limited

Address : Unit 801-808B, Office Tower C-2, Oriental Plaza, #1 East Chang An Avenue, Dongcheng

District, Beijing 100738, China

Tel : 86-10-8518-5899

Fax : 86-10-8518-8980

E-mail : bgh@skcorp.com

SK (Beijing) Road Science & Technology Co., Ltd.

Address : Room C-401, No. 18 Xihuan South Road, Beijing Economy Technology Development Area,

Beijing, China 100176

Tel :86-(10)-5157-0222 (ext. 801)

Fax : 86-(10)-5157-0221

E-mail : kibyung@skcorp.com

SK Corporation Shanghai Representative Office

Address : Room 3311-3312, Maxdo Center, No. 8, Xingyi Road Shanghai 200336 China

Tel : 86-(21)-6270-6016

Fax : 86-(21)-6270-9920, 6278-9582

E-mail : yshong@skcorp.com

SK Corporation SK International Trading (Shanghai) Co., Ltd.

Address : Room 3311-3312, Maxdo Center, No. 8, Xingyi Road Shanghai 200336 China

Tel : 86-(21)-5208-0909

Fax : 86-(21)-5108-0706

E-mail : j.h.lee@skcorp.com

SK Bio-Pharm Tech (Shanghai) Co., Ltd.

Address : Building3 No.34 Lane122 ChunXiao Road. Zhangjiang High-Tech Park, Shanghai 201203

China

Tel : 86-(21)-5080-4990

Fax : 86-(21)-5080-3483

E-mail : lkh@skcorp.com

Shanghai Gaoqiao-SK Solvents Co. Ltd

Address : 2908 Pu Dong Da Dao, Shanghai China 200129 中國上海市浦東大道 2908號 (郵編200129)

Tel : 86-(21)-5034-0702

Fax : 86-(21)-5034-2547

Guangdong SK Advanced Polymer Co., Ltd.

Address : Guangdong Zhaoqing High Technology Industry Development Zone 526238 China

Tel : 86-758-362-5003

Fax : 86-758-362-5026

E-mail : Guangzhou@skcorp.com

SK Corporation Guangzhou Office

Address : Room 3902, CITIC Plaza, No 233, Tianhe Bei Road, Guangzhou, Guangdong Province 510613

China

Tel : 86-(20)-3891-2093

Fax : 86-(20)-3891-2319

E-mail : hoon99@skcorp.com

SK Corporation Tokyo Branch

Address : Yamatoseimei Bldg. 8F 1-1-7, Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011, Japan

Tel : 81-3-3591-0343,3041

Fax : 81-3-3591-3073

E-mail : hblee@skcorp.com

Representative Office of SK Corporation in Kazakhstan

Address : Nurly Tau Block-2A, 5 Al-Farabi Ave, Almaty, Republic of Kazakhstan

Tel : 7-3272-777034

Fax : 7-3272-777036

E-mail : ingoo@skcorp.com

SK Energy Europe Limited

Address : 3rd Floor 11-12 Hanover Street, London W1S 1YQ United Kingdom

Tel : 44-(0)20-7495-0956

Fax : 44-(0)20-7495-1052

E-mail : ek@skcorp.com

SK Australia Pty. Ltd.

Address : Level 31, 2 Park Street, Sydney, NSW 2000, Australia

Tel :61-2-9261-0862

Fax : 61-2-9261-1331

E-mail : hlee@skcorp.com

SK Corporation Middel East Office

Address : Level 10, Dubai World Trade Centre, P.O. Box 9389, Dubai, UAE

Tel : 971-4-331-3457

Fax : 971-4-331-3316

E-mail : kbpark@skcorp.com

SK Corporation Kuwait Office

Address : Office #2829, Arraya Centre, Al Shuhada St., Sharq

P.O Box 29927, Safat 13160, Kuwait

Tel : 965-299-7823

Fax : 965-299-7822

E-mail : jycha@skcorp.com

Sales by Region (Activity & Markets)

Sales/ Unit :Mil KRW	As of 09/30/2006	As of 12/31/2005	As of 12/31/2004
Export	8,496,444	10,688,896	8,108,180
Domestic	9,044,599	11,225,686	9,297,883
Total	17,541,043	21,914,582	17,406,063

News Clipping

Black Gold Pumps Up Heart of SK Corporation

Korean Oil Company Out in Global Hunt for Petroleum, Natural Gas

KOREA TIMES: 07-26-2006

By Park Hyong-ki /Staff Reporter

SK Corporation joins forces with an international consortium to explore Camisea gas field, Block 88, seen above.

Every energy-consuming nation shares a common goal nowadays amid surging international oil prices.

That goal is to get access to the remaining, limited oil deposits around the world.

Korea is the world's seventh largest oil consumer depending heavily on Dubai Crude, which accounts for over 70 percent of the country's energy imports.

Korea does not produce a drop of oil but relies on it for economic growth.

With this in mind, Korea needs to maintain a solid relationship with Middle Eastern nations, as they control one of the most important oil deposits in the world.

In a recent movie, ``Syriana,'' about energy, politics, corporations and terrorism, a catchy and goose-bumped dialogue on oil took place: ``We're running out and 90 percent what's left is in the Middle East.''

However, geopolitical tensions and uncertainties in that region have forced Korea to look in other directions for supplies.

But the outlook for Korea looks bumpy as booming economies such as those of China and India join the race for oil, fueling competition and demand.

Tapping into precious energy resources has become one of Korea's top priorities today.

Hunt for Oil

As a result, Korea's leading energy firm, SK Corporation, is entering the spotlight. It has long been a front-runner in the global hunt for energy resources, including petroleum and liquefied natural gas (LNG).

As SK predicted long time ago that the world's demand for oil would gradually grow, the country's oldest and biggest oil refiner got a head-start in the exploration and production (E&P) business back in the early 1980s.

SK Corporation and Devon Energy jointly operate BM-C-8.

Its first oil exploration activity was conducted in Indonesia in 1983.

Since then, the company has explored 53 oil blocks (areas available for oil exploration) in 23 countries.

It is exploring 23 blocks in 13 countries, including Russia, Africa and Australia, and four LNG projects with proven reserves amounting to 420 million barrels as of this year.

Last year, SK became the first Korean oil company to achieve revenues of 200 billion won from its overseas projects.

``We have kept on going forward and investing in our global projects, despite ups and downs including the Asian Financial Crisis for the last 20 or so years,'' said a SK official.

E&P in South America

Joining multinational energy firms in oil and gas exploration and production in Peru and Brazil will help SK reach its goals.

In 2000, SK teamed up with the Peruvian government and an international consortium to explore natural gas reserves in Peru's Amazon jungle region of Camisea, located about 500 kilometers east of Peruvian capital Lima. This site is also known as Block 88.

The consortium consists of Argentina-based Pluspetro and Techint, U.S.-based Hunt Oil, Repsol YPF of Spain and Sonatrach of Algeria.

SK owns an 18 percent controlling stake in the Camisea gas field while Pluspetrol and Hunt Oil hold a 27 and 25 percent stake respectively in Block 88.

Techint and Sonatrach lead in exporting gas from Camisea followed by Pluspetrol, Hunt Oil and SK.

After four years of development in the region, full-scale production of LNG began in 2004.

The Peruvian Ministry of Energy and Mines together with the consortium, will sell natural gas to the United States through cooperating with Bolivia, Peru's neighbor.

SK, in the meantime, signed a sales and purchase agreement for Peru LNG last year.

The Korean oil company has also begun construction of a natural gas liquefaction plant in Pampa Melchorita, some 170 kilometers south of Lima.

The plant, which will be developed with Hunt Oil and Repsol YPF, will go into operation by 2009.

``We will be able to export 4.2 million metric tons of LNG per year to the West Coast of the U.S. and Mexico beginning in the latter half of 2009 for the next 18 years,'' said a SK spokeswoman.

SK is also engaged in the development of block BM-C-8 in the petroleum-rich Campos Basin, 250 kilometers east and offshore of Brazil's southeastern city of Rio de Janeiro.

The project is a joint venture between SK and U.S.-based Devon Energy Corporation. Each respectively owns a 40 percent and 60 percent interest in the block.

Since they were awarded exploration rights in 2000, SK and Devon have drilled three exploratory wells and two appraisal wells.

SK said that the block will have an annual capacity of 56 million barrels of oil.

Production is expected to begin in the second half of this year.

Both parties will explore, develop and produce oil from BM-C-8 for the next 27 years.

Road Ahead

SK is setting its sights high now, targeting access to 700 million barrels in proven reserves with a production level of 100,000 barrels per day (bpd) by 2010 from its global projects.

It plans to invest 338.5 billion won in global resource development this year, up 210.5 billion won from last year.

``We will continue to expand by actively exploring and extracting oil in other parts of the world such as Russia, Indonesia and Africa and keep the spirit of creating something from nothing while moving forward to become one of the world's top-tier energy companies,'' a SK official affirmed.

SK is one of the leading refiners in Asia with a total production capacity of 1.1 million bpd. It is also the largest gas station operator in Korea, with a network of over 4,000 service stations across the country and 36 percent share of the domestic market.

SK Sees China as Launch Pad for Global Goals

KOREA TIMES: 07-24-2006

By Kim Yon-se /Staff Reporter

Headquarters of SK Corp. in Sorin-dong, downtown Seoul

SK Corporation, South Korea’s oldest and largest oil refiner and one of Asia’s leading energy companies, is expanding overseas in search of oil, and the Chinese market is playing a big role in the company’s thrust to go global.

As the spearhead of SK Group’s globalization efforts, SK Corp. is gearing up to make inroads into China to capitalize on the Kingdom’s growing thirst for oil and consolidate its leadership position in the Asia-Pacific region.

The oil refiner, which seeks to boost its annual petroleum and petrochemical sales in China to more than $5 billion by 2010, signed a memorandum of understanding to acquire Inchon Oil Refinery, Korea’s fifth-biggest oil refiner, last October.

SK Corp., established in 1962, dominates roughly one-third of the domestic oil refining market.

When the Fair Trade Commission approves the corporate integration and SK Corp. completes its due diligence on Inchon Oil, the leading oil refiner’s equity ownership in the smaller rival that used to be under court receivership, will jump to over 90 percent.

Under the MOU, SK Corp. will purchase bonds worth 1.6 trillion won. In addition, the MOU includes SK Corp.’s paid-in capital increase worth 1.6 trillion won.

Buying Inchon Oil _ with a daily refining capacity of 275,000 barrels per day _ will increase SK Corp.’s refining capacity by a third to 1.11 million barrels a day, helping the Korean oil refiner to vault into Asia-Pacific’s fourth-largest refiner by output from the current fifth.

The company will then be the fourth-biggest oil refiner after China Petroleum & Chemical Corp. with refining

capacity of 3.29 million barrels per day, China National Petroleum Company (CNPC) with 2.65 million barrels and Nippon Oil Corp. with 1.17 million barrels.

An SK official said, ``Inchon Oil’s facilities are in a strategic location at the northernmost part of Korea’s west coast which faces China and will thus facilitate our exports to oil-thirsty China while reducing logistics costs.’’

SK Corp. plans to revise its mid- to long-term Chinese market strategy in line with the acquisition of Inchon Oil. It is confident that China will serve as a gateway to Inchon becoming an Asia-Pacific energy major.

China’s rapid development and economic growth are creating greater demand for SK Corp.’s products and services.

China’s total oil consumption, which amounted to 6.7 million barrels a day last year, is forecast to surge to 8.7 million barrels by 2010 and top 10 million barrels by 2015. By contrast, China’s domestic refined oil production stands at less than four million barrels per day.

SK Corp. plans to boost the share of its exports in annual revenue from current 46 percent to 50 percent by 2008. China accounts for 33 percent of SK Corp.’s exports.

As the initial phase in building the SK Group into a major global conglomerate, Chairman Chey Tae-won turned his eyes to mainland China in 1999, selecting the country as the conglomerate’s No. 1 key overseas market for the 21st century.

The corporation established Chinese affiliates the following year under an ambitious vision to incubate its affiliates into leading players in key segments of the Chinese market by 2010.

Indeed, SK Corp. was an early mover. SK was the first Korean company to open offices in China even before official diplomatic ties were established between the two countries.

The SK Group, under its ``SK in China’’ strategy, has built a global network of companies that share SK Group’s management philosophy and culture.

SK Corp. has a presence in six cities including eight local and three branch offices.

Nineteen sales and production affiliates of the SK Group, led by SK Corp., SK Networks, SKC, SK Chemicals, SK Shipping and SK Gas, are already operating in China. The oil refiner already set up a holding firm for its Chinese production and sales affiliates last October.

In particular, SK Corp., has been striving to expand its distribution and sales networks in China.

SKC’s chemical business division also inked an agreement with China’s largest energy and chemicals firm SINOPEC to collaborate on advancing into the Chinese polyurethane market.

The investment marks the latest stage in SK Corp.’s expansion into the Chinese market under a projection that its sales in China would reach more than $5 billion a year by 2010, 60 percent of which is estimated to be generated by the local entities in China.

SK Corp. established SK China Holding, located in Beijing, last year.

China is the number one export destination for SK Corp., accounting for 33 percent of the company’s total outbound shipments and 15 percent of revenue in the first half of 2005.

SK Group said its top priority in Chinese operations is to return profits back to the local communities.

The conglomerate has also established an academic R&D network by setting up Asia Research Centers at 13 major Asian universities outside of Korea, including Peking University, Tsinghua University, National University of Mongolia, Yangon University of Myanmar and Vietnam National University in Hanoi.

SK Corp.’s bold vision does not stop in the Asia-Pacific. The oil refiner is simultaneously struggling to aggressively expand its presence in the U.S. following its successful entry into China over the past six years.

SK Corp. also recently inked an agreement on establishing a solvent production joint venture with Sinopec and Ningbo Asphalt Terminal, an asphalt storage and logistics joint venture with Zhejiang Province Highway Materials as well as Shanghai Gaoqiao-SK Solvent.

The oil refiner has world’s second-largest single oil refining complex.

SK Emerges as Asia's Energy Leader

KOREA TIMES: 11-19-2005

SK Corp. chairman Chey Tae-won, right, ushers Chinese President Fu Jintao into a meeting room for talks during APEC 2005 Korea in Pusan last week. SK’s presence in China has been expanding rapidly in recent years as part of its global market strategy.

The SK Group has grown into South Korea’s fourth-biggest chaebol, or family-controlled conglomerate, with 52 subsidiaries from a small textile manufacturer founded in 1953.

The year 2005 has been a milestone for the SK Group’s globalization drive to true world-class multinational business group.

At the frontline of the SK Group’s globalization push has been SK Corp., Korea’s oldest and biggest oil refiner established in 1962. SK Corp. is one of SK Group’s key affiliates along with SK Telecom.

SK Corp. is gearing up to make full-fledged inroads into China to capitalize on the Kingdom’s growing thirst for oil and consolidate its leadership position in the Asia-Pacific region.

Toward the end, Korea’s biggest oil refiner, which seeks to boost its annual petroleum and petrochemical sales in China to more than $5 billion by 2010, clinched a memorandum of understanding (MOU) to acquire Inchon Oil Refinery, Korea’s fifth-biggest oil refiner, in October.

SK Corp. dominates roughly one-third of the domestic oil refining market.

When the Fair Trade Commission (FTC) approves the corporate integration and SK Corp. completes its due diligence on Inchon Oil, the leading oil refiner’s equity ownership in the smaller rival, which used to be under court receivership, will jump to over 90 percent.

Under the MOU, SK Corp. will purchase bonds worth 1.6 trillion won. In addition, the MOU includes SK Corp.’s paid-in capital increase worth 1.6 trillion won.

Buying Inchon Oil _ with daily refining capacity of 275,000 barrels per day _ will increase SK Corp.’s refining capacity by a third to 1.11 million barrels a day, helping the Korean oil refiner to vault into Asia-Pacific’s fourth-largest refiner by output from current fifth.

SK Corp. will emerge as the fourth-biggest oil refiner after China Petroleum & Chemical Corp. (Sinopec) with refining capacity of 3.29 million barrels per day, China National Petroleum Company (CNPC) with 2.65 million barrels and Nippon Oil Corp. with 1.17 million barrels.

``Inchon Oil’s facilities are located in strategic location of northernmost part of Korea’s west coast, which is facing China thus it is believed to facilitate our exports to oil-thirsty China while reducing logistics cost,’’ said SK spokesman.

SK Corp. plans to revise its mid- to long-term Chinese market strategy in line with the acquisition of Inchon Oil.

SK Corp. is confident that China would serve as its gateway to becoming the Asia-Pacific energy major.

China’s rapid development and economic growth are creating greater demand for SK Corp.’s products and services.

China’s total oil consumption, which amounted to 6.7 million barrels a day last year, is forecast to surge to 8.7 million barrels by 2010 and top 10 million barrels by 2015. In contrast, China’s domestic refined oil production stands at less than 4 million barrels per day.

SK Corp. plans to boost the share of exports in annual revenue from current 46 percent to 50 percent by 2008. China accounts for 33 percent of SK Corp.’s exports.

As the initial phase in building the SK Group into a major global conglomerate, SK Group and SK Corp. chairman Chey Tae-won turned his eyes to mainland China in 1999, selecting the country as the conglomerate’s No. 1 key overseas market for the 21st century.

The corporation established Chinese affiliates the following year under an ambitious vision to incubate its affiliates into leading players in key segments of the Chinese market by 2010.

Indeed, SK Corp. was an early mover. SK was the first Korean company to open offices in China even before the official diplomatic ties were established between Korea and China.

The SK Group, under its ``SK in China’’ strategy, has built a global network of companies that share SK Group’s management philosophy and culture.

SK Corp. has a presence in six cities including eight local and three branch offices.

Nineteen sales and production affiliates of the SK Group, led by SK Corp., SK Networks, SKC, SK Chemicals, SK Shipping and SK Gas, are already in operation in China. The oil refiner has set up a holding firm for its Chinese production and sales affiliates last October.

In particular, SK Corp., has been striving to expand its distribution and sales networks in China.

SKC’s chemical business division also inked an agreement with China’s largest energy and chemicals firm SINOPEC to collaborate on advancing into the Chinese polyurethane market.

SK Corp. established SK China Holding, located in Beijing, last year.

China is No. 1 export destination for SK Corp., accounting for 33 percent of the company’s total outbound shipments and 15 percent of revenue in the first half of 2005.

The SK Group said it places the top priority of its Chinese operations on returning profits back to the local communities.

SK Corp.’s bold vision does not stop in Asia-Pacific. The oil refiner is simultaneously struggling to aggressively expand its presence in the U.S. follows its successful entry into China over the past six years.

The oil refiner has world’s second-largest single oil refining complex.

Having a total of 4,931 employees on its payroll and 22 offices worldwide, SK Corp. chalked up 17 trillion won in sales last year.

Sound Financial Structure

``We have a clear vision for our future. Operating efficiency and management accountability are at the foundation of our business practices,’’ said SK Corp. chairman Chey.

``They are key to building greater shareholder trust and customer confidence as we move forward. Joining the ranks of oil producing nations through greater exploration activities and expanding to other global markets, particularly China, is at the foundation of our growth strategy,’’ he added.

SK Corp. has a sound financial position that significantly enhances its resiliency to tough market conditions.

The company posted 1.6 trillion won in operating profit and 1.64 trillion won in net profit in 2004. Shareholder dividends also surged 240 percent from a year earlier to 1,800 won last year.

Fueled by the strong international crude oil prices that pushed up petroleum and petrochemical product prices, SK Corp.’s revenue jumped 25 percent year-on-year to 9.95 trillion won in the first half of 2005.

Its debt-to-equity ratio also improved to 62 percent as of the end of last June from 74 percent in 2004.

SK Corp. attributes the recent surge in profits to its continuous efforts to move into less-cyclical and more stable business segments.

The robust business growth is also ascribed to recent improvement in SK Corp.’s corporate governance structure.

Seventy percent of SK Corp. directors are independent outside directors.

Moreover, six board committees _ audit committee, nomination committee, strategic planning committee, human resource committee, transparent management committee and corporate government committee _ enhance supervision of the company through a system of checks and balances.

All sub-committees are chaired by outside directors, who plays central role in preventing corrupt business dealings.

Thanks to its efforts to improve corporate governance structure, SK Corp. was chosen as one of top 10 publicly traded companies in the 2005 Corporate Governance Award organized by the Korea Corporate Governance Service (KCGS).

It also received ``Best Audit’’ award presented by the Korea Listed Companies Association (KLCA) and the Korea Institute of Certified Public Accountants (KICPA).

Advancing into Bio Sector

SK Corp. also seeks to foster biopharmaceuticals as a new flagship business in coming years.

It also founded the New Jersey R&D Center in the U.S. in 1989.

The research and development (R&D) center focuses on developing new medicine and pharmaceutical intermediates.

SK Corp. plans to extend the scope of the R&D center’s research to medicines for curing central nerve disorders, diabetes and cancer.

The New Jersey R&D Center is the first medical lab set up by Korean capital to acquire a clinical test license from the U.S. Food and Drug Administration.

It is currently conducting clinical tests with Johnson & Johnson of the U.S. for antidepressant and epilepsy cures, drugs it developed between 1999 and 2000.

By 2030, the SK Group plans to have established biotechnology as its core business, in the expectation that the IT sector will have reached maturity by that time.

To this end, the SK Group and SK China established the SK Bio-Pharmaceuticals Tech Shanghai R&D Center in the Chinese city in 2002. The R&D center is a 50-50 joint venture with the Shanghai city government.

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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