SK Innovation marks 64th anniversary with push to become total energy company

SK Innovation marked its 64th anniversary Tuesday, celebrating decades of achievement — including building one of the world's largest crude oil processing facilities — while confronting growing questions about the long-term viability of its refining-heavy business model. The company plans to develop LNG, small modular reactors and energy storage systems to reinvent itself as a total energy company for the AI era.

Over its 64-year history, SK Innovation has left a string of milestones in South Korea's refining industry. Its Ulsan Complex has grown into the world's third-largest crude processing facility, with a daily capacity of 840,000 barrels.

The company traces its roots to Korea Oil Corp., established in 1962. Sunkyong — now SK Group — acquired the state-run firm in 1980 to complete a vertical integration of its oil and textile businesses and diversify its portfolio. After the takeover, Korea Oil Corp. was renamed Yukong and expanded into resource development and battery operations. In 2011, the company was reorganized under the SK Innovation holding structure to improve efficiency across its energy businesses.

SK Innovation is expected to post strong earnings this year despite headwinds including the Middle East war. Securities analysts forecast the company's operating profit at 9.99 trillion won ($7.47 billion) for the year, more than 22 times the 448.7 billion won recorded the previous year. The surge reflects a lagging effect from soaring oil prices, a shortage in lubricant supply and strong performance from its battery business.

Despite the earnings rebound, SK Innovation is not letting its guard down. Uncertainty stemming from Middle East risks persists, and its petrochemical arm, SK Geocentric, has struggled to find its footing amid a supply glut driven by Chinese producers. Demand for refined products also faces an uncertain trajectory as the global shift toward cleaner energy accelerates.

To break out of this bind, SK Innovation plans to accelerate a structural overhaul — reducing its dependence on refining and transforming into a total energy company. The goal is to emerge as a reliable power supplier for AI infrastructure that operates around the clock.

LNG and small modular reactors sit at the center of that transformation. Both are gaining attention as energy sources for AI data centers, which require enormous amounts of electricity. LNG offers flexible output adjustment and emits fewer greenhouse gases than conventional fossil fuels, while SMRs run continuously, take up less space and generate power at a smaller scale than conventional nuclear plants.

SK Innovation is moving quickly to expand its global LNG footprint. Its in-house independent company, SK Innovation E&S, is pursuing a stake in China's Ganyu LNG terminal. If secured, that would bring its overseas LNG terminal holdings to three, adding to existing stakes in the Freeport terminal in North America and the Darwin terminal in Australia.

The company is also working to lock in a stable LNG supply. The Barossa project, into which SK Innovation E&S invested around 2 trillion won, began full-scale operation this year and produced its first LNG cargo in January. The first shipment arrived in South Korea in February and was offloaded at the Boryeong LNG terminal in South Chungcheong Province.

On the SMR front, SK Innovation is deepening its partnership with US-based TerraPower. Together with SK Group's holding company SK Inc., it invested $250 million to become TerraPower's second-largest shareholder. In August, the two companies signed an agreement to pursue the global commercialization of Natrium, TerraPower's next-generation non-light-water SMR.

SK Innovation is also stepping up efforts to build out its ESS capabilities to support data center operations, developing a multifunctional integrated ESS product tailored for AI data centers. At its second-quarter earnings call, the company said it was "preparing to enter the US ESS business" and was "reviewing a conversion of production lines at its North America and Seosan factories, with the scale to be determined based on future orders."