[Innovation of SKI] ① From Refining Company to Eco-Friendly Energy Enterprise... 60 Years of Innovation

The First Domestic Refinery 'SK Innovation' 60th Anniversary
Realizing 'From Oil to Textiles' through Acquisition of Korea National Oil Corporation
Total Assets of 64 Trillion KRW... Growing into the Largest Petrochemical Company in Korea

Editor's NoteSK Innovation, regarded as the 'most successful privatization' company, will celebrate its 60th anniversary on the 13th. Starting with Korea Oil Corporation in October 1962, it was acquired by SK Group (then Seonkyung Group) in 1980, evolving through 'Yukong' to become a core affiliate within SK Group. SK Innovation became a decisive turning point for SK Group's business expansion from textiles to petrochemicals. Over the past 60 years, SK Innovation has grown from Korea's first refining company to a comprehensive energy and petrochemical enterprise, and is now seeking innovation once again. This is the so-called 'Carbon to Green' financial story, a major shift in business focus from fossil fuels to eco-friendly energy. Facing the challenge of climate change, it is growing non-refining businesses such as electric vehicle batteries, waste plastics, and eco-friendly materials into core portfolios. We review the innovative footsteps SK Innovation has taken and look ahead to its future vision.

[Asia Economy Reporter Oh Hyung-gil] SK Innovation’s 60 years, which began with Korea Oil Corporation established in 1962 as a joint venture with the American Gulf Oil Corporation, parallels the development history of Korea’s oil industry. When the Ulsan refinery, capable of producing 35,000 barrels of oil per day, started operations in 1964, Korea, which previously produced not a single drop of oil, became an oil powerhouse with the world’s fifth-largest refining capacity.

With Gulf Oil’s withdrawal, Seonkyung Group acquired shares of Korea Oil Corporation in 1980, realizing the dream of SK’s late chairman Chey Jong-hyun of 'from oil to textiles.' At that time, Chairman Chey personally led the secret team formed to acquire Gulf’s shares, showing his dedication to the acquisition process.

In 1982, the company changed its name to Yukong and, riding the momentum, challenged overseas oil field development from 1983, which had only a 5% success rate. The following year, in 1984, it succeeded in developing the North Yemen oil field. This moment is remembered as the time when Korea joined the ranks of 'resource-poor oil-producing countries,' beyond mere corporate success.

Later, in 1991, the company completed a paraxylene (PX) manufacturing facility in Ulsan, a raw material for synthetic fibers, establishing a genuine vertical integration. At that time, Chairman Chey said, "While competitors in the textile industry focused solely on textiles, I worked to complete vertical integration from oil to textiles," adding, "There is a huge difference between competing with a plan and without one."

The appearance at the completion ceremony of Ulsan Refinery, Korea National Oil Corporation, the predecessor of SK Innovation.

Demonstrating Entrepreneurship through Overseas Oil Field Development, Vertical Integration, and Lubricant Base Oil Business

The Entrepreneurship Society analyzed that Korea Oil Corporation, the starting point of SK Innovation, grew under the 'big picture' of becoming a comprehensive energy company after meeting SK, and evolved into a global green energy leader through a second innovation called 'deep change' to proactively respond to new management environments.

Lee Chun-woo, chairman of the Entrepreneurship Society, said, "A 5% success rate is similar to the survival probability of startups, indicating a high-risk business," and evaluated, "This conveys the message that innovation was created through entrepreneurship involving exploration, pioneering, and challenge, rather than maintaining the status quo."

SK Innovation was also the first refining company to establish a technology research institute, securing R&D capabilities and continuously expanding petroleum-related business areas such as the lubricant base oil business. Yukong Research Institute strengthened business competitiveness through process and product technology innovation and contributed to establishing SK Innovation’s culture of innovation.

The premium (Group 3) lubricant base oil, developed successfully for the first time in the world, has become a global standard. The premium lubricant base oil 'Ubase,' mass-produced successfully in 1995, is currently used as a raw material in premium lubricants produced by global refiners such as Shell, ExxonMobil, and BP (British Petroleum).

SK Energy will mark the first anniversary on the 1st of next month since Korea National Oil Corporation changed its name and made a fresh start.

Leading ESG Management Centered on the Board of Directors

Subsequently, the company changed its name to SK Innovation in 2011 after going through SK Corporation and SK Energy, steadily growing to become Korea’s largest petrochemical company with total assets reaching 64 trillion won.

SK Innovation has been leading ESG (Environmental, Social, and Governance) management by modernizing corporate governance early on. A representative example is being the first Korean company to compose more than 70% of its board of directors with outside directors.

Last year, to strengthen board-centered management, decision-making authority over CEO evaluation, compensation, and succession was delegated to the board, and pre-review of ESG risks for all board agenda items was made mandatory. The audit office, previously directly under the CEO, was moved under the audit committee, expanding the board’s role as a control tower.

SK Innovation is transforming its identity from a 'carbon business to a green-centered business' and is expected to play the role of a holding company developing eco-friendly businesses. At the shareholders’ meeting held in March, Kim Jun, Vice Chairman of SK Innovation, stated, "Going forward, SK Innovation will add new portfolios by securing and commercializing various future energy and circular economy-related new technologies," and added, "We will be recognized as a value-driven eco-friendly energy materials company."