South Korea's SK Innovation to exit from Peru LNG

South Korea's top oil refiner SK Innovation has agreed to sell its entire 20% stake in Peru LNG to US-based MidOcean Energy for $256 million to secure capital for its future growth engines, the company said Feb. 8.

SK Earthon, the refiner's subsidiary for exploration and production, signed the deal for the stake sale Feb. 7 with MidOcean Energy, the liquefied natural gas unit of US energy investor EIG.

SK Innovation bought the stake in the Peru LNG project in 2003 in which Hunt Oil, with a 50% stake, and Marubeni Corp, with a 10% stake, are also involved, among others.

"We will use the proceeds from the stake sale in Peru LNG to maximize synergies between overseas oil development and future growth drivers," SK Innovation said.

The refiner has recently focused its upstream business on China and Southeast Asia, as part of its "business reorganization strategy" focused on decarbonization, while pushing for new business such as carbon capture and storage.

In its 2023 earnings report Feb. 6, SK Innovation said its upstream sector sales volumes increased "following the commencement of operation in the new Chinese block and higher composite selling prices resulting from greater proportion of oil."

In September last year, SK Innovation started crude production at China's offshore Block 17-03, which would pump up to 29,500 b/d. SK Earthon has been involved in Block 17-03 since 2015 with a 39.2% stake, with CNOOC holding the remaining 60.8%.

SK Earthon also signed a production sharing contract with Malaysian companies in April 2022 for Block SK427 off the coast of Sarawak in which the South Korean developer acquired an 85% stake, with 15% owned by PSEP, the Sarawak-owned oil and gas company.

SK Earthon sold its stake in shale oil production fields in Oklahoma and Texas in 2021. SK Earthon is also seeking to sell its 17.6% stake in two Peruvian has fields -- Block 88 and Block 56.

SK Earthon, is currently involved in 14 oil and gas upstream projects in eight nations, including six blocks under production such as Block 17-03 in China and Block 15-1 in Vietnam.