SK E&S considers selling real estate for clean energy

SK E&S Co., the natural gas business unit of South Korea’s SK Group, is mulling selling its real estate asset in Seoul, which is expected to fetch up to 500 billion won ($376 million), to give a boost to its new renewable energy business, especially hydrogen.

According to sources in the Korean energy industry, SK E&S is reviewing an option to cash in on a building and land occupied by its fully-owned city gas subsidiary Ko-won Energy Service in the affluent Gangnam area.

It is said to be in talks with one of Korea’s major medical centers to sell off the real estate asset estimated worth between 400 billion and 500 billion won.

SK E&S is seeking to unload the building and land to raise the money needed to expand its new growth engine in the clean energy sector, such as hydrogen, said industry observers.

TO EXPAND A CLEAN ENERG PORTFOLIO   

The company is Korea’s top city gas supplier with multiple related subsidiaries. It is also the country’s biggest liquefied natural gas (LNG) importer, bringing 5 million tons a year of LNG out of the 9 million tons that the country imports annually.

It has been actively seeking to add new renewable energy sources to its portfolio with a focus on blue hydrogen, solar energy and wind power farms.

SK E&S is a major stakeholder of the Barossa and Caldita fields offshore northern Australia estimated to have at least 70 million tons of natural gas reserves, about a two-year supply for Korea.

It has been operating development projects in the fields with the other shareholders – Australia’s oil and gas company Santos Corp. and ConocoPhillips Corp., a US crude oil producer.

The Korean LNG importer plans to start producing 250,000 tons of blue hydrogen annually in 2026 with low-carbon natural gas from the Barossa field.

Blue hydrogen is decarbonized hydrogen, which is hydrogen manufactured by natural gas reforming coupled with carbon capture and storage (CCS).

With its blue hydrogen project, the company is projected to join a South Korean government bid for a clean hydrogen power project, industry observers said.

SK E&S in 2022 announced its foray into the CCS business as part of its effort to enhance a green energy portfolio.  

Besides hydrogen and CCS businesses, SK E&S is also expanding its presence in the solar and wind energy markets.

Write to Woo-Sub Kim at duter@hankyung.com
Sookyung Seo edited this article.