SK : innovation Completed Company’s Record High Overhaul and Resumed Operation

Being able to secure the largest production capacity through overhaul

- Completion of simultaneous and multiple overhaul…Minimizing business vacancy through early process stabilization
- Minimizing loss through operation optimization and maximizing…About to achieve company's record high sales revenue
- Strong in refining margin and PX spread…Expected to keep bullishing in 2017

SK innovation is emerging as a global top-tier energy/chemical company by obtaining company's record high production capability of petrochemical production facilities.

On December 12, 2016, SK innovation (CEO and Vice Chairman Jeong Cheong-Gil, www.skinnovation.com) announced that the company has successfully completed the biggest overhaul of its main production facilities Woolsan CLX and SK incheon petrochem and all the production processes began normal operations.

Through the completion of all overhauls, SK innovation will be able to operate its all petrochemical facilities one hundred percent.

Also, the company was able to improve the production of energy and chemical facilities by revamping few facilities, which has been executed at the same time with overhauls.

Through this revamping, SK innovation's production capacity hit record high: Oil refinery daily output of 1,115,000 barrels and 2.8 million tons of PX production a year.

SK innovation announced the successful completion of the whole overhaul after finishing the overhaul of Woolsan CLX No. 2 FCC.

The major production base Woolsan CLX performed overhaul on 13 processes among total 21 processes since March 2016 and SK Incheon petrochem stopped the system to perform overhaul for 40 days from mid-September.

In addition, Sinopec-SK Wuhan Petrochemical, which is considered as the most significant example of SK innovation's global partnering strategy, had successfully completed overhaul during the first quarter of 2016.

On average, Woolsan CLX overhauled eight to nine processes annually, but this year it overhauled company's record high 13 processes: Two among five oil refineries, all three FCC, Nexlene factory, and UAC factory. Overhaul was performed at majority of facilities.

Participants to the overhaul were 350,000 people in total from 200 companies in Woolsan and Incheon, maximum 8,000 people a day.

One remarkable feature is that, even though a large overhaul was participated by numerous workers in simultaneous works at different processes, the company completed the overhaul without any incidents and injuries.

The company made sure to prevent various possible incidents in advance and paid close attention to thorough management of workers.

SK innovation's differentiated competitiveness 'Optimization' shined the most during this overhaul.

The company determined the schedule of overhaul in advance through exact anticipation on annual supply plan and detailed analysis of the market conditions of each oil and petrochemical product.

In addition, the company prepared measures to secure stocks and minimize loss from valuation of inventory in order to make on-time deliveries to customers at home and abroad.
By using OPI in the third quarter of 2016 when overhauls were concentrated such as five processes of Woolsan CLX and a full-scale overhaul of SK incheon petrochem, the company was able to minimize supply delays and control the amount of exports, which made a contribution to normal business management.

On top of the minimization of overhaul loss, SK innovation's major business such as oil and petrochemical sectors showed a great performance and SK innovation made an effort to diversify its business portfolio, which resulted in excellent performance that exceeds the sales revenue of 2011.

Jeong Cheong-Gil, Vice Chairman of SK innovation, had visited the overhaul site of Woolsan CLX in mid-October and encouraged the company members, 'I am proud of the successful completion of the biggest overhaul in spite of many difficulties. I bet there will be no place like Woolsan CLX that can operate and execute a perfect maintenance without any incidents in the whole world.'

The industry is anticipating that, through this successful completion of overhaul, SK innovation will be able to accelerate performance improvement in near future.

The reason for this anticipation lies in that the oil price and refining margin, which are considered as the most important sales index of oil industry, are expected to be remained positive in 2017 and SK innovation was able to pave the way for production improvement and safe process operation through the overhauls of major production processes.

It is said that the OPEC's agreement to the first oil production cut in eight years got rid of the biggest uncertainty of the oil industry.

The market predicts that the oil price will remain bullish more than USD 50.00 and the refining margin will be strong due to tight demand and supply of petrochemical products over the world.

On top of that, as the conditions of petrochemical products such as PX is predicted to bullish in 2017, the sales is also considered to be strong in 2017.

Lee Hang-Soo, President of SK innovation PR Team, said, 'We had focused on expansion of global production bases through global partnering in 2015 and tried to reinforce the original competitiveness through a large overhaul of the existing facilities in 2016. In 2017, we will concentrate on maximizing the efficiency via optimizing the operation.'