SK E&S Co., Korea’s top city gas provider, said on Monday it has absorbed and merged with K-Power, its power-generation affiliate, to boost their liquefied natural gas business.
The merger took effect on Monday. Parent company SK Holdings, the country’s No. 3 conglomerate, now holds a 94.13-percent stake in SK E&S, and SK C&C the remainder.
SK shares rose 2.2 percent on Monday to close at 185,500 won ($176.8) on the Korea Exchange.
“SK E&S will drive future growth of the group by bolstering vertical integration of the LNG value chain,” Chey Jae-won, SK Group senior vice chairman, said at a ceremony in Seoul.
The conglomerate has been looking to beef up the LNG business as prices and demand soar in the aftermath of a Japanese nuclear crisis.
Jun Yong-ki, an analyst at Hyundai Securities, picked SK as the biggest winner from the latest surge.
“Its subsidiary K-Power brings in the materials from Indonesia at a fixed price under a long-term contract. So the pricier LNG gets, the greater profit the company generates,” he said.
SK Innovation, Korea’s top crude oil refiner, secured three LNG blocks and four liquefaction plants overseas. SK E&C, the group’s builder, won seven orders to establish gas plants in six countries last year alone, worth more than $3.1 billion.
An 800-megawatt gas-fired plant is also under construction in Pyeongtaek, Gyeonggi Province. SK E&S said it aims to enter commercial operation in Jan. 2013.
Korea is the world’s second-largest LNG importer following Japan. State-run Korea Gas Corp. accounts for nearly 95 percent of the wholesale market.
By Shin Hyon-hee (
heeshin@heraldcorp.com)
