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- Settled down as a successful cooperation model between Korea and the US in accordance with the Second Shale Gas Revolution
SK Group succeeded in contracting a new level of global partnering with America’s energy companies during a visit to the United States by President Moon Jae-in.
Chairman Chey Tae-won’s cooperative model, which is to create synergy effects by combining Korean company’s largest investment with resources of American companies, bore fruit during the visit.
In particular, President Trump’s cabinet is expected to actively promote energy development policy ‘The Second Shale Revolution’. In accordance with this, SK Group was able to create the highest level of global partnering that companies in both countries share their management infrastructure such as core capabilities, information, and networks in order to find out and invest to new business opportunities in the global stage.
In the future, SK Group will be able to position Korea as an ‘oil-producing country without resource’ through the abundant resources of the United States and pave the way to make profit by exporting to third countries. On the other hand, American energy companies will be able to increase exports to foreign countries and create more jobs in the United States by increasing investment.
SK Group announced that, at the Washington St Regis Hotel on June 28, 2017 (local time), Chairman Chey Tae-won, who is visiting the United States on an economic mission, and Yoo Jeong-Joon, President of SK E&S and Chief of SK Global Growth Committee, signed an MOU with America’s representative energy companies GE and Continental Resources (hereunder Continental) to reinforce strategic relationships focusing on shale gas produced in the US.
During the signing ceremony, Chairman Chey said, “For sustainable business cooperation, both parties need a new business model that can cause mutual growth. This MOU between a Korean company and US companies has its significance in that, through the Second Shale Revolution, we will be able to create the highest level of global partnering model, which can be meaningful to both countries, let alone companies.”
SK Group and GE agreed to develop shale gas in the United States and promote global joint marketing in order to secure the source of demand such as power generation projects promoted in Asia, South America, and Africa where the two companies will sell LNG and LPG produced in the US.
SK will provide energy and GE will supply power generation equipment, while sharing project information and network. The two companies will also cooperate in new renewable power generation businesses such as solar and wind power generation in Southeast Asia and the Middle East as well as both countries.
Through this MOU, the two companies were able to pave the way to accelerate global businesses based on the existing strategic relationships.
SK E&S’s CEO Yoo Jeong-Joon and GE’s Vice Chairman John Rice signed the MOU.
In addition, by using Continental’s operation capability and information on shale gas, SK Group and Continental have agreed to expand joint development of shale gas in the United States and find more opportunities on shale gas business of which production is expected to increase.
Continental’s Chairman Harold G. Hamm and SK E&S’s CEO Yoo Jeong-Joon signed the MOU.
Before this, SK Group’s energy subsidiary SK E&S took over 49.9% share of gas field in the United States in 2014 by investing USD 360 million for joint development of shale gas.
Through this, SK E&S was able to secure almost 38 million tons of gas among total 76 million tons.
This amount is much more than the total imported natural gas (almost 33.45 million tons) in 2016.
SK Group explained that this business model was a win-win for both countries.
The Korean government was able to expand the portion of clean energy by securing US produced LNG and lower reliance on LNG from the Middle East, which will also reinforce the energy security of Korea.
In addition, this will be able to contribute on securing 12% of overseas emission right through new renewable power generation projects. South Korea has to cut 2030 greenhouse gas emissions by 37% from BAU levels.
The US government is expecting meaningful effects. SK Group is planning to invest KRW 1.8 trillion for the next five years to the United States and seeking chances to make additional KRW 3 to 5 trillion investment.
Along with this, the balance of trade will be improved by producing and exporting US energy for close to KRW 2 trillion per year and about for 4,000 to 5,000 jobs are expected to be created.
This is the most optimized model to create jobs through resource development, which is promoted by Trump’s cabinet.
Lee Hang-Soo, President of SK Group PR Team, said, “SK’s representative growth strategy is a global partnering, which is to build partnerships with overseas major companies by SK’s subsidiaries and achieve mutual growth through resource cooperation, technical cooperation, and joint marketing. Under the lead of Chairman Chey, SK Group is reinforcing a global partnering in the field of energy, chemicals, ICT, and semiconductor.”
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