Since economic sanctions on Iran have been lifted, South Korea has doubled its oil imports from Iran compared to last year. According to Korea National Oil Corporation (KNOC) on June 5, the volume of imported oil from Iran between January and April this year reached 29,963,000 barrels. It has increased by more than two times the volume of 14,033,000 barrels imported during the same period of last year.
SK Innovation Co., Ltd. is the oil refiner that has imported the largest amount of oil from Iran. Iranian crude oil is 5 to 6 dollars cheaper a barrel than that of Qatar. Over the years, the company has purchased the ultra-light oil (condensate) mainly from Qatar.
According to its earnings in the first quarter of 2016, SK Innovation recorded 6,646 billion won of revenue in the oil business unit, with 490.5 billion won of the operating profit. The price drop of petroleum goods due to low oil prices has led to the decreased sales. The operating profit, however, has increased by 205.5 billion won compared to the previous quarter due to the increase in margins in refining business and the reduced loss from inventory valuation which is brought about by recovery of oil prices. Global oil prices gained in February and March after hitting a record low in January this year. A big increase in the volume of Iranian oil imports has played a role in such an improvement in the performance.
SK Group, which has dedicated itself to resource development focusing on oil, is currently making inroads into a wide range of markets in Iran. Early in May, six CEOs of SK Group, such as SK Group chairman Chey Tae-won, Global Growth Committee Chairman and CEO of SK E&S Yu Jeoung-joon, SK Telecom CEO Jang Dong-hyun, SK Networks CEO Moon Jong-hoon, SK Energy CEO Kim Joon, SK Trading International CEO Song Jin-hwa, accompanied President Park Geun-hye for her state visit to Iran as members of the economic mission.
Explaining the background of the large-scale business delegation, SK Group said, “Iran is emerging as a market with enormous potential in the areas of oil resources, infrastructure reconstruction, information and communications technology (ICT) after the economic sanctions against the country was just lifted,” stressing, “SK Group has a strong competitiveness in entering into the Iranian market as we have energy, information and communications and city construction as core businesses.”
For his 2 days 3 nights visit to Iran, Chairman Chey met with Roknodin Javadi, chairman of the National Iranian Oil Company and Deputy Minister of Petroleum, and Seyed Mohsen Ghamsari, the company's director of international affairs, to discuss ways for further cooperation.
On June 2, Chey met with Mehdi Jamali, chairman of SAIPA Group, Iran's second-largest auto maker, and agreed to expand strategic partnerships in the local market. Under this agreement, SK Networks signed a memorandum of understanding (MOU) with SAIPA to kick off lease, installment financing, and other auto-related financial services in Iran.
In addition, SK Telecom concluded an MOU with the Iranian energy ministry and the National Iranian Gas Company, respectively, to cooperate for Internet of Things (IoT)-based business, and also signed a separate partnership agreement with Iran’s energy and tech giant ARSH Holdings.
SK Telecom will push ahead with a LoRa-based trial remote gas meter reading project. LoRa is an international IoT standard technology developed by the Lora Alliance which about 200 international companies, including SK Telecom, Cisco, IBM, and Semtech join. It also plans to launch a pilot service to provide remote electricity management solutions for 15 landmark buildings in the city center of Tehran in partnership with Iran’s Ministry of Energy.
Based on its IoT business in Iran, SK Telecom will move to expand its business into other Middle Eastern countries and other emerging countries with much interest in the efficient utilization of new energy resources.