SK Innovation buys Myanmar company stake

Two SK Innovation subsidiaries acquired a 35 percent stake in Best Oil Company (BOC), Myanmar’s second-largest petroleum distributor.

The local oil refiner said that SK Energy and SK Trading International signed the acquisition contract on Thursday in Myanmar.

Best Oil has a 17 percent share in Myanmar’s petroleum market.

It is the parent company of PT Power Trading, which imports oil and distributes it to the country’s southern regions, and Padauk Shwe War (PSW) Terminal, which constructs and operates port terminals for petroleum imports. According to SK, the deal was worth 150 billion won ($127.7 million).

“The strategic investment was made in order to secure a stable exports and trading market, and to discover growth opportunities in the foreign retail market,” said SK Trading International CEO and President Suh Sok-won. SK Trading International is the export and trading subsidiary of SK Innovation.

SK companies have been eyeing Southeast Asia for its growth potential and have pushed for investments with an aim to establish a footprint there. The deal in Myanmar is SK’s second in the region.

Last year, SK Energy acquired 5.23 percent in PetroVietnam (PV) Oil, becoming the second-largest shareholder in Vietnam’s No. 2 petroleum distributor. SK Energy is a producer of various petroleum products and asphalt.

SK said that Myanmar’s demand for petrochemical products is expected to grow at an annual average rate of 10 percent through 2025, boosted by industrial development and the easing import regulations in 2012 that led to an increase in the number of personal vehicles.

Between 2013 and 2017, Myanmar’s annual GDP growth rate was 7.2 percent. The country is located strategically between China and India, and has abundant resources and labor.

“SK will make use of our world-class petroleum business know-how to boost our partner’s performance,” said SK Energy CEO and President Cho Kyong-mok.

“With this stepping stone, we will expand our influence in the Southeast Asian market.”

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]