Marketing Prowess

 

SK Innovation has recently strengthened the company’s marketing prowess in the petroleum product market in Southeast Asia, especially Indonesia.

The company thought it would not be easy to expand the market any more due to the economic slump in China and the expansion of its own refining facilities. So, it made the decision to secure a long-term foundation of existence, getting out of the structure focusing on exports to China.

According to SK Innovation on Oct. 11, the company has recently won a series of orders from PT Pertamina, Indonesia's state-owned oil and natural gas corporation, to provide petroleum products, beating global competitors.

PT Pertamina procures petroleum products through a competitive bidding, and SK Innovation is actively participating in a bid to make inroads into the market of Indonesia, which has emerged as a new export market for South Korean refiners amid a slump in shipments to China.

With a population of 250 million, Indonesia ranks 16th in terms of gross domestic product (GDP) and 10th in terms of purchasing power. Also, it is the largest economic power in Southeast Asia. However, the country relies on imports for 40 percent of its needs for gasoline and other oil products due to old, inadequate refining facilities and a lack of refining capacity.

In the first half of the year, South Korean exports of petroleum products to Indonesia came to 16.18 million barrels, up 34 percent from six months earlier, with SK Innovation taking up 90 percent of the total.

In addition to exporting petroleum products, SK Innovation is also strengthening its cooperation with PT Pertamina.

Previously, SK Innovation CEO Chung Chul-khil said in the press conference held in May, “For the petroleum business sector, we will strengthen the partnerships with major oil-producing countries, including Saudi Arabia, to lay the foundation for stable oil introduction, and expand our export outlets through strategic partnerships with major petroleum product importers in the region.”

In this regard, CEO Chung visited Indonesia in May as his first destination of a solo business trip after his inauguration, and discussed cooperation plans with the management of PT Pertamina.

SK Innovation and PT Pertamina already operate a joint lubricant plant in Indonesia, and the company has recently sent out professional technicians of its Ulsan plant to the country for the smooth operation of the refining facilities of PT Pertamina.

The two companies are currently discussing each other’s interests and possible cooperation areas in the future.

“Since China has turned into a country with self-sufficient refining capacity from oil importers due to the rapid expansion of its refining facilities, and the demand has become weak, there is a sharp drop in exports to China,” said an SK Innovation spokesperson, “So, SK Innovation is making concerted efforts to secure the new export markets in Southeast Asia, especially Indonesia, escaping from the existing structure focusing on exporting to China.” 

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