SK Innovation’s oil exploration unit, SK Earthon, is considering divesting its shares in three Vietnamese oil blocks with an estimated value of Won200bn ($140m), reported the Korea Economic Daily (KED), citing familiar sources.

Since 1998, SK Earthon has been involved in the co-development of four oil blocks in Vietnam, alongside US-based Murphy Oil and PetroVietnam Exploration Production Corporation (PVEP), a state-owned entity.

The South Korean company's holdings amount to a 25% share in these four exploration and development blocks, including Block 15-1, which is currently in the production phase.

Murphy Oil has a 40% stake in these blocks, while PVEP owns 35%.

However, Block 15-1 is not part of the divestment, which is being handled by SC Securities.

According to the KED report, this particular block produced more than 400 million barrels (mbbl) of oil by the end of 2023, ranking it as the “second-largest” cumulative oil producer in the country.

As per reports by Vietnamese media outlets, block 15-2/17, which is still in the exploratory phase, is estimated to hold more than 170mbbl of recoverable oil. This figure represents roughly 18% of South Korea's annual oil consumption.

Industry experts suggest that the sale is part of SK Earthon's strategy to mitigate the inherent risks associated with the development of the resource.

Such projects are said to typically demand huge investments and can take more than ten years to become operational.

An official from the South Korean petroleum industry indicated to KED that SK Earthon's plans would require approval from its joint venture collaborators, which could potentially introduce complexities into the sale process.

The industry official said: “Valuations for producing oil blocks can be roughly estimated by multiplying projected output over the next 25 years by global crude price forecasts.

“But it is a different story for blocks still in the development or exploration phase. High investment costs and inherent risks make valuation far more complex.”