From LNG to SMRs, SK Innovation eyes role as AI energy solutions provider

SK Innovation is pushing beyond its traditional refining business to build capabilities in new energy ventures, including LNG and small modular reactors, as it works to reinvent itself as an AI infrastructure energy solutions provider for the power-hungry AI market.

LNG is by far the company's flagship future growth engine, according to industry sources Wednesday. SK Innovation E&S, an in-house independent company within SK Innovation, is spearheading the LNG business and building out a full value chain spanning upstream operations — gas fields and LNG plants — through midstream trading and transport to downstream power generation.

The Barossa gas field project, which achieved its first LNG production this year, is expected to serve as the cornerstone of the LNG business. Through the project, SK Innovation E&S has secured an annual LNG supply of 1.3 million tons.

SMRs are another new business area SK Innovation is pursuing. Together with SK Inc., the company invested $250 million to become the second-largest shareholder of TerraPower, a US-based SMR company. TerraPower is currently building what would be the world's first commercial SMR plant in Wyoming.

To deepen its collaboration with TerraPower, SK Innovation signed an agreement last month to pursue the global commercialization of Natrium, a next-generation non-light-water SMR. SK Group Chairman Chey Tae-won and TerraPower board chairman Bill Gates, who both attended the signing ceremony, also discussed the future direction of the next-generation nuclear power industry.

AI is the driving force behind SK Innovation's push to strengthen its LNG and SMR capabilities. AI data centers and advanced manufacturing facilities require a stable power supply around the clock, but conventional fossil fuels emit pollutants while renewable energy is hampered by its dependence on weather conditions.

LNG and SMRs have emerged as the answer to this challenge. LNG allows for rapid adjustment of power output and produces fewer greenhouse gas emissions than conventional fossil fuels. Capitalizing on these advantages, a recent public forum on the 12th Basic Plan for Electricity, organized by the Ministry of Climate and Energy, put forward a proposal to replace 27 coal-fired power units — totaling 13.6 gigawatts and set to reach the end of their design life by 2036 — with LNG-fired generation. SMRs, meanwhile, operate around the clock and offer greater space efficiency than conventional nuclear plants by generating less power in a smaller footprint.

As the importance of power in the AI era grows, SK Innovation plans to accelerate its push into new businesses. At its second-quarter earnings presentation, the company unveiled a growth strategy centered on electrification, positioning itself as an energy solutions provider for AI infrastructure.

Collaboration with global partners is already underway. At a recent Ulsan forum, SK Group Chairman Chey emphasized that SK Innovation "is developing electrification solutions needed for AI data centers and has investment plans with many partners to expand those solutions."