On April 24, SK Earthon announced that the company signed the Production Sharing Contract (PSC) with Malaysia’s state-owned oil and gas company Petronas (Petroliam Nasional Berhad) and PSEP (Petroleum Sarawak Exploration and Production Sdn., Bhd.) after winning the bid on Block SK 427, an oil block located off the coast of Sarawak region last year.
This is the first time SK Earthon successfully won a bid for the operatorship of an oil block in Malaysia. By securing the mineral rights and operatorship, the company is now ready to start the exploration of Block SK 427 in full swing.
The mineral rights are property rights acquired for exploiting a particular area on land or at sea, authorized by a legitimate procedure, such as winning a bid, for natural resources, such as oil and gas, that the plot harbors. According to the acquisition of the mineral rights, a party that signs the mineral rights contract with an oil-producing country is referred to as an operator.
Mineral rights contract is a contract on technical and business liability, rights, and obligations of developing a block.
SK Earthon acquired 85% participating interest of the Block SK 427, and, as an operator, it is responsible for the exploration, development, and production of the block. SK Earthon will be partnering with PSEP, which owns the remaining 15%, to carry out exploration. The final decision on the development and production of the block will be made by exploration results over the next four years.
SK Earthon officials said, “Winning the bid on Block SK 427 in Malaysia proves that SK Earthon has gained recognition as one of the best petroleum developers and block operators in the region with technical excellence.” “By leveraging the technologies and capabilities that we gained through our experiences in the nearby exploration block in Vietnam, we will maximize the prospects of the Malaysian block that will serve us as a bridgehead for our mid- and long-term business expansion in the Southeast Asian countries.”
Block SK 427 is a shallow-water block off the coast of Sarawak, and it is known as an area that has good exploration prospects as a series of medium- and large-size petroleum resources has been discovered in Sarawak and its surrounding areas. The block also has multiple geological structures that allow for drilling within the block. Moreover, the area has advantages for the E&P as infrastructure, including a pipeline system already built for exploration blocks nearby which have been operated for oil development.
SK Earthon and Petronas share the same aspiration about the need for carbon reduction and look forward to finding opportunities and solutions for Carbon Capture and Storage (CCS) together in the future.
SK Earthon chose the green sector based on the CCS as its new growth engine to execute its Financial Story of “Carbon to Green,” and the company has been discovering opportunities for various business projects inside and outside Korea.
Myeong Seong, CEO of SK Earthon, emphasized, “By exerting our E&P capabilities and differentiated technologies that have been long accumulated, we will increase our chance of success in this Malaysian block while accelerating our plan to expand the business in Malaysia and Southeast Asia.”
SK Innovation and its subsidiaries, including SK Earthon, began the resource exploration business in 1983. As of 2022, they are operating projects in 11 blocks and running four LNG projects in eight countries, and producing about 51,000 barrels of oil and natural gas equivalent per day. As of the end of 2020, its reserves were a total of 380 million barrels of oil and natural gas equivalent.
