RHDS/RFCC Project‟s Competitive Advantage at Both Edges Feedstock cost savings by utilizing HSFO1000 instead of HSFO380/HSFO180 Deliver a yield of 89% comprising premium gasoline to middle distillate products Kerosene LSFO HSFO 1000 (80 MB/D) Sulfur Propylene Alkylate PRU (974 T/D) Alkylation (18 MB/D) GDS (30 MB/D) Gasoline Diesel 6.8% 2.6% 13.5% 19.4% 8.4% 25.1% 22.5% Yield Ratio HSFO 6.1% 88.9% RHDS (80 MB/D) 104.4% C4 (7.6 MB/D) RFCC (60 MB/D) SK Incheon Oil 56
Transcript
RHDS/RFCC Project‟s Competitive Advantage at Both Edges
Feedstock cost savings by utilizing HSFO1000 instead of HSFO380/HSFO180
Deliver a yield of 89% comprising premium gasoline to middle distillate products
Kerosene
LSFO
HSFO
1000(80 MB/D)
Sulfur
Propylene
Alkylate
PRU(974 T/D)
Alkylation(18 MB/D)
GDS(30 MB/D)
Gasoline
Diesel
6.8%
2.6%
13.5%
19.4%
8.4%
25.1%
22.5%
Yield Ratio
HSFO 6.1%
88.9%
RHDS(80 MB/D)
104.4%
C4(7.6 MB/D)
RFCC(60 MB/D)
SK Incheon Oil
56
Refining Process
• MDU : Middle Distillate Unit (De-sulfurizer)
• VDU: Vacuum Distillation Unit
• HOU: Heavy Oil Upgrading (Cracker)
• VRDS: Vacuum Residue De-sulfurization Unit
• RHDS: Residue Hydro De-sulfurization Unit
• RFCC: Residue Fluid Catalytic Cracking Unit (Cracker)
• HSFO: High Sulfur Fuel Oil
• UCO: Unconverted Oil
Petroleum Business
Crude
Distillation
Unit MDU
LPG
Gasoline
Naphtha
Kerosene
Diesel
HSFO
Asphalts
RFCC
RFCC Process
Slurry Oil
Propylene
Gasoline
Alkylate
Kerosene
Diesel
LSFO
HSFO
RHDS
HOU
VDU
VRDS
HOU Process LPG
Naphtha
Kerosene
Diesel
UCO
Diesel
LSFO
Secondary Refining (Crackers)Primary Refining Process
22
Optimization through Independent Operations
With the CDU and RHDS / RFCC units based in different locations,
operation can be optimized independently according to market conditions
Ulsan
Incheon
RHDS/RFCC Process
RFCCRHDS
Propylene
Alkylate
Gasoline
Kerosene
Diesel
LSFO
HSFO
Sulfur
HSFO
1000
PRU
Alkylation
GDS
SK
Energy
BTX Process
MDU
LPG
Naphtha
Kerosene
Gasoline
Diesel
Asphalt
Reformer
Benzene
Toluene
Xylene
CDU
1&2
HSFO
CDU Unit - Incheon RHDS / RFCC Unit - Ulsan
Feedstock
SK Incheon Oil
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RHDS/RFCC Capex Plan and Funding
Substantial Portion of Investments Funded with Internal Excess Cash
Internal net cash: KRW685 bn (as of 2006)
Financing the rest of the budget: KRW829 bn
► Contribution from internal cash flow
generation during 2007 ~ 2008
► Leverage on strong credit profile
► Usance, corporate bonds,
bank loans, etc.
Total investment : Approx. KRW1.75 trn
► Land to be leased from SK Energy
Initiatives to minimize investment cost
► Diversify suppliers of equipment and
materials
► Timely procurement of equipment &
materials
► Complete investment within schedule
► Competitive bidding for foreign
engineering contractors
► Optimize and integrate with existing
SK Ulsan facilities to minimize overlap Almost 80% of total investment in
RHDS/RFCC is expected to generate tax
savings (10%)
These tax savings would offset income tax
payable by SKICO
► Total tax saving of KRW140 bn
(KRW bn) 2006 2007 2008 Total
RHDS/RFCC
Capex236 1,275 239 1,750
Capex Plan Financing
Tax Incentives for the Investment
SK Incheon Oil
55
RHDS Construction well under way
SK Incheon Oil
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Synergy effects from integrated operations are not reflected (2004 ~ 2005)
Backward simulation indicates additional EBITDA of 700 bn KRW during 2004 ~ 2006
when factoring in the effects of the RHDS/RFCC
Backward Simulation Analysis
(bn KRW)
264
829
173
873
Theoretical EBITDA Based on Historical Margins and Prices
SK Incheon Oil
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Board of Directors
Tae Won Chey (July, 2007 – March, 2010)
Heon Cheol Shin (July, 2007 – March, 2010)
Joon Ho Kim (July, 2007 – March, 2010)
The Board of Directors comprises 3 Inside and 6 Independent Non-Executive Directors, and includes six committees which assist the BoD in achieving SK Energy‟s goals
Inside Directors
Soon Cho (July, 2007 – March, 2010)
Young Suk Han (July, 2007 – March, 2010)
Dae Woo Nam (July, 2007 – March, 2010)
Sei Jong Oh (July, 2007 – March, 2010)
Tai Yoo Kim (July, 2007 – March, 2010)
In Goo Han (July, 2007 – March, 2010)
Independent NEDs
Audit Committee
Nomination
Committee
Strategic Planning
Committee
Human Resources
Committee
Transparent
Management
Committee
Corporate
Governance
Committee
Corporate Governance
Increase Transparency
Strengthen
Management
Accountability
Establish a System of
Checks and Balances
Goals
41
Committees
Audit managerial activities of directors
Audit accounting and corporate affairs
Six committees of experts have been established to enhance management transparency
Audit Committee
(3/3)
Nomination
Committee (2/3)
Strategic Planning
Committee (2/3)
Human Resources
Committee (2/3)
Transparent Mgt
Committee (2/3)
Corporate Governance
Committee (2/3)
Recommend nominees for Independent NEDs
Manage the pool of Independent NED nominees
Review business strategy and target
Review investment plans
Recommend Inside Director nominees
Review of major human resources management strategy
Review related parties transactions in advance
Review code of ethics
Review corporate governance issues, such as Articles of Incorporation, bylaws of BoD, etc.
※ All committees are chaired by Independent NEDs
Heon Cheol ShinSoon Cho
Young Suk Han
Committee
(INEDs/Total)Main Function
Chairman / Members
of Committee
Corporate Governance
In Goo HanDae Woo NamSei Jong Oh
Tae Won CheyTai Yoo KimIn Goo Han
Dae Woo NamJoon Ho Kim
Soon Cho
Sei Jong OhHeon Cheol ShinYoung Suk Han
Tae Won CheyTai Yoo Kim
Young Suk Han
42
BoD Comparison
SK Energy‟s efforts to improve corporate governance have proven to be successful and its corporate governance now ranks among the best in Korea
SK Energy A Electronics B Bank C Corporation
Independent NEDs
Scheduled Meeting
(average per month)
Distribution of
materials on issues
Directors‟
Attendance Rate
Supporting
Organization
Office for
Independent NEDs
6
(67% of total)7
(54% of total)
8
(67% of total)9
(60% of total)
Monthly
(1.2 per month)
Quarterly
(0.7 per month)
Quarterly
(0.9 per month)
6 times per year
(0.5 per month)
5 days in advance 1 day in advance 3 days in advance 3-5 day in advance
