Good afternoon. We would now like to begin the earnings release by SK Innovation.
Good afternoon. I am Chung So-young from the IR Communications at SK Innovation. Thank you for joining the company's Q1 2026 earnings presentation. With me today are SK Innovation CFO Seo Geon-ki, Head of Corporate Finance Planning Office, [Bae Geun-ha], and the management team from respective businesses. We will begin with CFO Seo Geon-ki presenting on the company-wide Q1 2026 business results, followed by executives reporting on their respective businesses, after which we will take your questions. Do note that the numbers we are presenting today are yet to be audited by the external auditor and thus are subject to change upon such review. With that said, let me invite CFO Seo Geon-ki to present on the first quarter highlights and business results.
Good afternoon. This is Seo Geon-ki, CFO of SK Innovation. Allow me to start by thanking our shareholders, investors, and analysts for your continued interest in the company. I will begin with the first quarter 2026 business highlights. As per the news report on 24th of February, the first LNG production cargo from Australia's Barossa gas field, where we hold equity interest, made its successful delivery to LNG terminal at Boryeong, Chungnam Province. Since partaking in the project in 2012, our overseas exploration effort over the past 14 years have now come to fruition, and it was the first time for a Korean private company to have completed the entire process independently from exploration to development, production and delivery.
Natural gas produced at Australia's Northwest Offshore Barossa gas field is liquefied at the Darwin LNG terminal, and we plan to have stable supply of around 1.3 million tons of LNG for 20 years. Amid extreme gas price volatilities due to global geopolitical risk, us having a direct equity ownership in overseas gas field and securing long-term offtake will also contribute to strengthening national energy security. Second, the consortium that we are part of made the final selection as the project operator for Vietnam's Quynh Lap LNG power project. The project is massive, $2.3 billion or KRW 3.3 trillion infrastructure project, concurrently building 1,500 MW combined cycle gas power plant and 250,000 cu m LNG terminal and a dedicated port. Groundbreaking will be in 2027, the completion of the power plant and the terminal will both be in 2030.
By using our global LNG portfolio, including the gas fields in North America and Australia, we have put in place an independent LNG value chain business model, where LNG will be transported to Vietnam terminal and used by the power plant. The project win is meaningful as the first such case where Korea's private company replicated its successful LNG value chain model overseas. This will thus be an important springboard for the company to make the leap as a major global LNG player, expanding our LNG portfolio to 10 million tons by year 2030. Last but not least, SK On in February secured more than half of the total volume, which is around KRW 1 trillion in size, in the second government ESS procurement tender program. ESS will be built at seven locations, including six at Chungnam Province and one in Jeju Island.
Through the bid, we won three projects in the Chungnam province. Out of 565 MW program, we were awarded 284 MW, which accounts for 50.3%. We will supply LFP pouches and leveraging advanced battery technology and local production capabilities, we plan to participate in the subsequent tender bid as well. This has been a brief highlight on SK Innovation. Moving on to details of 1st quarter earnings results. On the back of revenue expansion seen across the entire energy business, Q1 2026 revenue was up KRW 4.54 trillion QoQ, reporting KRW 24.21 trillion. On rising crude and petroleum product prices leading to inventory-related gains, operating profit increased KRW 1.86 trillion, reporting KRW 2.16 trillion.
For non-operating items on the back of base effect from last quarter's impairment, loss narrowed QoQ, reporting KRW 767.3 billion. There were FX related loss of KRW 159.8 billion, derivative loss of KRW 461.5 billion, net interest expense of KRW 327.7 billion, equity method loss of KRW 23.8 billion, and KRW 205.5 billion of other income. In terms of the financial position, company's asset totaled KRW 110.1 trillion as of end of Q1 2026, driven by increases in receivables on higher crude prices versus end of last year, reporting an increase of KRW 4.5 trillion.
Total liabilities stood at KRW 72 trillion, up KRW 2.8 trillion on rise in trade payables from refinery and petrol chem business, while debt to equity ratio dipped 1 percentage point year-to-date to 189%. Net debt came in at KRW 24.6 trillion, increasing around KRW 2 trillion year-to-date due to decline in cash following increases in net working capital. Next, we will go through a business breakdown of Q1 results, and we'll present on the details of the look back and outlook of major companies. Please refer to page six, Business Performance of each Innovation affiliate companies, which has been disclosed. Moving on to page seven. We are moving on to look back and outlook of key businesses. We will begin with SK Energy, and we'll invite Chu Yong Yu, Head of Strategy Operation Division.
Good afternoon. I am Chu Yong Yu, Head of Strategy Operation Division of SK Energy. I will begin with the first quarter business results. SK Energy's operating profit for Q1 was KRW 1,283,200,000,000 , up KRW 1,000,500,000,000 QoQ. Improvement in earnings was driven by surge in crude price following the closure of Strait of Hormuz on the back of the Middle Eastern conflict, leading to inventory related gains of KRW 780 billion and lagging effect from the oil price. Since future oil price and refining margin will depend on how the Middle Eastern conflict unfolds and on whether transit through Hormuz Strait becomes possible and the degree thereof, volatility seem inevitable. Rather than rushing into any judgment, we will navigate the changing situation nimbly through optimized operations. Next, I will invite Kim Yong-soo, Head of Planning Office at SK geo centric.
Yes, to talk about our Q1 results. Market in Q1 saw tight supply with regional PX facilities undergoing scheduled turnaround, which was heavily concentrated during the period. Thus we saw the spread widen. With some resumption of offshore sales of benzene, the trend improved, while Naphtha price drove positive inventory effect and rollover effect across primary and byproducts, which drove sizable QOQ improvement in profitability for the first quarter. While uncertainties run high in sourcing raw materials based on vertical integration with SK Energy, we have stable sourcing in place and are focusing on maximizing company's earnings via operational optimization.
In the second quarter, we expect upside momentum from the lagging effect seen on primary products. There's also possibility of variability in profit due to inventory and rollover effect when and if crude price starts to fall. Earnings at this point are subject to variability depending on the movement of oil price. To preemptively navigate oil price fluctuation risk, we will focus our efforts on strategic inventory operations and marketing optimization so as to defend our margin.
Miss Mi-kyeong Kim, Head of Corporate Planning and Development Office of SK Enmove, will present on SK Enmove.
I am Kim Mi-k yeong, Head of Strategic Planning at SK Enmove, a CIC within SK On. I will explain the lube business. Despite margin compression resulting from rising crude oil prices in Q1, SK Enmove delivered operating profit of KRW 188.5 billion, up KRW 7.4 billion QoQ, driven by favorable inventory effects. Looking ahead to Q2, uncertainty from the Middle East conflict is expected to continue. That said, competitors supply disruptions and raw material shortages are keeping the market tight, which could support spread improvement. With geopolitical risk driving heightened focus on supply security, our multi-site production footprint positions us as a dependable supplier, a meaningful differentiator in the current market environment. We will leverage this advantage to maintain solid sales and profitability and to further strengthen our leadership in the Group III base oil market.
Next, Mr. Kim Kyoung-jun , Head of Planning and Business Support Office at SK Earthon will present on SK Earthon.
Good afternoon. I am Kim Kyoung-jun , Head of Planning and Business Support. SK Earthon recorded Q1 operating profit of KRW 64.7 billion, up KRW 39 billion Qo Q, driven by an improvement in composite ASP on the back of higher oil and gas prices. For reference, the above figures exclude the performance of our Peru block, which recorded operating profit of KRW 62.7 billion, up KRW 7.3 billion Qo Q, also benefiting from higher composite ASP. Looking ahead to Q2, while geopolitical uncertainty stemming from the ongoing conflict remains elevated, we expect to sustain solid profitability should current ASP levels hold. I will now provide an update on our key operations. At China 17-03, we plan to drill three additional production wells to sustain output, with further development of remaining potential to follow.
At Vietnam block 15-1, we're working to ramp up gas production at the White Lion field through the drilling of four additional production wells and construction of production facilities within the year. At Vietnam 15 to 15-1/05, development of the LDV structure is currently underway, encompassing production well drilling and facility fabrication. We're targeting first production in Q4 2026 upon completion of the development activities. Finally, at Vietnam block 15-2/17, the third appraisal well is currently being drilled, and we plan to drill additional appraisal wells within the year to more precisely delineate our potential resource volumes. That concludes my presentation.
Next, Mr. Kim Yong-kwan , Head of Financial Support Office at SK On will present the battery business.
Hello, I am Kim Yong Kwan, Head of Financial Support at SK On. I will address our battery business performance in Q1 2026 and share our outlook going forward. Starting with our Q1 results. In Q1, a modest increase in North American volumes alongside a broader recovery in Europe and Asia improved our overall regional sales mix. Driving revenue up 23% QoQ to KRW 1,791,200,000,000 . Operating loss narrowed on modesty QoQ to KRW 349.2 billion as regional sales recovery and company-wide cost reduction initiatives helped mitigate the ongoing drag from low utilization rates in North America.
Despite ongoing market volatility, we remain committed to a company-wide profitability improvement through operational optimization, fixed cost reduction, and procurement and logistics efficiencies. In parallel, we are advancing portfolio rebalancing initiatives to strengthen our medium to long-term competitive position. Turning now to our business outlook. In Europe, local production incentives and EV support policies are gradually strengthening across member states with benefits expected to accrue primarily to manufacturers with an established regional production footprint. In line with these shifting market dynamics, we plan to enhance the operational stability of our European facilities and sharpen our customer responsiveness, laying the groundwork for improved utilization and earnings recovery. In North America, while near-term EV demand uncertainty may persist, new growth opportunities are emerging in the ESS market.
In particular, rising demand, tied to AI data centers and renewable energy integration is expected to drive structural growth in North American ESS demand. We are actively expanding our order pipeline in this space, to build mid to long-term earnings momentum. By diversifying our portfolio beyond EVs, to include ESS, we aim to build greater resilience to market volatility and establish a more stable earnings base. Alongside this, we will continue to improve our site-level operational efficiency, restructure our fixed cost base, and harness AI and digital technologies across our supply chain and manufacturing processes to drive, fundamental cost competitiveness. Thank you.
Next, Mr. Kwon Hyung-kyun , Head of Management Planning at SK E&S, will present on the SK Innovation E&S business.
Hello. I am Head of Management Planning at SK Innovation E&S. My name is Kwon Hyung-kyun . Q1 operating profit stood at KRW 283.2 billion QoQ, driven by higher city gas sales volumes on the back of increased winter heating demand as well as rise in the SMP. In Q2, city gas demand is expected to soften as we enter the seasonal off-peak period. In preparation for peak summer power demand, we will secure long-term inventory positions and carry out interseasonal plant maintenance to ensure stable power supply through the summer months.
This ends the presentation. Now we move on to the Q&A session. We want to first address several questions that we received in advance on our website. For this earnings call, we received questions from the investors and analysts ahead of time and pre-selected the ones that were of high interest.
For those frequently asked questions, we will provide the answers through simultaneous interpretation. The first question concerns the battery business. The outlook for EV sales in light of rising oil prices driven by the Middle East conflict is the question. For this, I ask Mr. Kim Yong-kwan , Head of Financial Support Office at SK On to address this question.
Yes, I am Kim Yong-kwan , Head of Financial Support at SK On. I will address the impact of rising oil prices driven by geopolitical developments in the Middle East and other factors on EV sales. The recent rise in oil prices is broadly supportive of EV demand as it underscores the running cost advantages of electric vehicles.
That said, the trajectory of EV demand will be shaped less by oil prices alone and more by a combination of regional policy environments, consumer incentives and OEM sales strategies. We expect trends to diverge meaningfully across markets. In Q1 2026, the global EV and battery industry showed divergent trends across regions, reflecting differences in policy environments and the pace of demand recovery. In the U.S., demand recovery following the expiration of the CTC has been more gradual than anticipated. While the recent rise in oil prices does highlight the cost of ownership advantages of EVs, near-term sentiment remains rather cautious, given to the current headwinds from interest rate pressures, consumer confidence and policy uncertainty.
Should these external factors ease gradually, however, EV economics could once again become an important catalyst for demand recovery. In contrast, Europe continues to show more positive momentum. EV sales are growing at a double-digit pace year on year, supported by the reintroduction of EV incentives in Germany, expanded support measures in the U.K. and tightening CO2 emissions regulations. The visibility of this recovery is relatively high, underpinned by regulation driven demand dynamics with the recent rise in oil prices providing an additional tailwind to the broader shift toward clean mobility. Within Europe, the Industrial Accelerator Act, or IAA, is progressively taking shape as a policy framework that favors regional production and supply chains.
It is expected to create a more favorable operating environment for manufacturers within itself established local production footprint and supply chain presence. A position we believe SK On is well placed to benefit from. In parallel, we are managing near-term EV market volatility while broadening our portfolio into ESS to build a more stable and balanced growth platform. To capture the high growth opportunity in ESS, we are converting select EV battery lines to ESS production and continuing to build out our ESS order book most recently through Flatiron Energy in the U.S. and awards under Korean government's ESS procurement program. By spanning both EV and ESS in our portfolio, we aim to reduce our exposure to any single market or demand cycle and deliver more sustainable profitability over the mid to long term.
Let's move on to the second question. The second question concerns our crude oil procurement plans, utilization rate outlook and mitigation strategies. I will ask Mr. Chu Yong Yu, Head of Management Planning at SK Energy to address this question.
I am Chu Yong Yu, Head of Management Planning at SK Energy. I will address SK Energy's crude procurement plan. We have in Q2 TA planned, the utilization outlook is rather low because of the closure of the Strait of Hormuz. We will continue to source a portion of our Middle Eastern crudes through shipments via other terminals.
Well, thank you very much for your answers. Now we will take questions from the floor.
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Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone. The first question will be provided by Woo-je Chun from KB Securities. Please go ahead with your question.
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Thank you. I am Woo-je Chun from KB Securities. I would like to ask you three questions. First question relates to, would like to get your take on whether there's been any changes with regards to your new capacity addition plan since the outbreak of the war in the Middle East, and also any color on global supply as well as the utilization outlook. Second question, would like to understand, would there be any impact in terms of your yield and your margin in line with the changes in the sources based upon which you are sourcing your crude oil? Third question is, can you share with us at the company level, what is the inventory related gain that you've reported? Can you share with us the breakdown by different companies?
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Responding to your question with regards to the exact and accurate utilization information of the global refineries. At this point, there are numbers that are coming out. In terms of the credibility, there are certain questions. Having said that, based upon such information source within Asia and Middle East, we are estimating at about 8 million barrel per day impact disruption. In terms of the scheduled turnaround, there is a certain number that is out there. Because there is certain room that each of the nations can actually adjust, it would be quite hard to say what the concrete numbers are.
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In terms of the plan regarding capacity addition before the outbreak of the war in the Middle East, the overall projection was about 1 million barrel per day net addition. There has been certain delays in the operation by certain refineries. We believe that level may not be met.
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Second, in terms of the impact, regarding the import of the crude oil that we used to get, especially the heavy crude that we used to get from the Middle Eastern countries. Basically, we are continuing on with importing and being supplied with through the Yanbu and Fujairah Port. Also, we are importing the FOs as well as other crude from sources like Canada, U.S., Ecuador and Brazil.
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Through such diversified sources, we've been trying to minimize the impact from the war. Also there is some negative impact because of the higher freight in terms of importing the crude oil. We are making full use of our own vessels as well as the support and subsidies that we can get from the government for diversifying the crude oil sources so that we may minimize our bottom line impact as much as possible.
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Responding to your question about the corporate wide inventory gains as well as the breakdown by each of the companies. I am Chung So-young from IR Communications. Including the impact from the valuation at cost method as of Q1 2026, corporate wide inventory related gain stands at KRW 1,024,900,000,000 , which is an increase on a QoQ basis of KRW 1,119,800,000,000 .
[Non-English content] SK [Non-English content] , SK [Non-English content] , SK [Non-English content] , [Non-English content] SK [Non-English content] .
Looking at the corporate breakdown, for SK Energy, the inventory gains stand at KRW 776 billion. SK Incheon, meaning IPC KRW 92.1 billion, SK geo centric KRW 90.7 billion, SK Enmove KRW 66.1 billion. Also do note that the inventory gain is a line item that will be impacted by changing market backdrop and its impact on the accounting treatment.
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The following question will be presented by Parsley Ong from JP Morgan. Please go ahead with your question.
Hi. Thank you for the chance to ask question. I have two questions. The first one is on SK On. Ford recently reiterated that it plans to start producing U.S. ESS from 4th quarter 2027. Could you share with us what is the impact on SK On North America ESS pipeline and price competitiveness? What are SK On's differentiation strategies? Also, you mentioned the Korea order win just now. What kind of margins do you expect for your Korean ESS? The second question is on lubricants or SK Enmove. I see that your first quarter earnings are pretty strong and Middle East conflict has caused significant damage to quite a lot of Group III capacity. Media reports say some of those Group III capacities might take one year to fix.
Could you share with us why SK's base oil utilization is only in the 50% range? Could SK ramp up your production volume to help offset some of this market deficit? Maybe share with us your outlook on this. Thank you.
JP Morgan [Non-English content] Parsley Ong [Non-English content]. [Non-English content] SK [Non-English content] . Ford Energy [Non-English content] SK [Non-English content] ESS [Non-English content] SK [Non-English content] ESS [Non-English content] SK [Non-English content] ESS [Non-English content] SK Enmove [Non-English content] . SK Enmove Q1 [Non-English content] [Non-English content], [Non-English content] .
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Yes, I would like to take your first question on SK On. This is Kim Yong-k wan, Head of Financial Support Office of SK On. I would like to first talk about the Ford Energy entry into the market. Now it is difficult to quantify the specific impact of Ford Energy's market entry on our North American ESS order pipeline or pricing competitiveness at this stage.
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That said, given the strong medium to long term growth outlook for the North American ESS market, the entry of new players and an evolving competitive landscape are something that we see as natural.
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The ESS market is ultimately one on quality, safety, supply, reliability, and also project execution, and not price alone. These are the areas that we are building our competitive edge.
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We will stay nimble as the North American market evolves, while expanding our ESS footprint and also solidify our position.
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With regard to your question about the recent ESS award margins, please do note that we are not in a position to disclose the figures at this moment. Thank you.
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This is Kim Mi-kyeong, Head of Corporate Planning and Development Office as at SK Enmove, and I will take your second question. Now, the number 50% utilization rate that you cited appears to be calculated against the maximum nameplate capacity.
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Now, this includes the Group II HBO unit taken offline in 2021. It is somewhat, it is not an accurate reflection of the actual operating utilizations at the moment, and the actual utilization today is higher than the number cited.
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We understand that there are shortages in the market, and we are trying our best in order to enhance our utilization rates. Do note that we are not in a position to provide specific guidance on the potential for further utilization improvement at this time.
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The following question will be presented by Yong-Wook Lee from Hanwha Investment & Securities. Please go ahead with your question.
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Thank you for taking my question. I am Yong- Wook from Hanwha Investment & Securities. I would like to ask you three questions. What was your CapEx base as of Q1 of 2026, and what is your annual plan? Also, I would like to understand whether you would see any need for additional financing or any asset rationalization efforts that you will be implementing. As of end of 2026, what is your estimate for your net debt or net liability? Second question. In the E.U. market, we've seen EV sales actually take off and report a steep growth. I would think that that would have had a meaningful impact on your utilization. Can you provide us with an update on your utilization figure?
My third question has to do with your ESS business. What are your plans for further ESS order wins and also line conversion plan? And also would like to understand as to the extent of the contribution that your domestic ESS long duration business is going to have on your bottom line, and when would the timing be? And also you did mention you're planning on participating in the third round of the government bidding or the tender program for ESS. Can you provide a little more color on that? Let me respond to your first question. I am Seo Geon-ki, the CFO.
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if you look at our cumulative first quarter CapEx, it was around KRW 0.8 trillion. In detail, the CapEx spend for the battery business was 300 billion, SK E&S 200 billion, and combining the ordinary and strategic investment, it amounted to 300 billion KRW.
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This actually represents 23% of our 2026 annual CapEx guidance of KRW 3.5 trillion . As, and thus, as you can see, our CapEx spend is stable within the planned scope. Now, in terms of the net debt as of end of Q1 of 2026, as I've mentioned at the very beginning, it now stands at KRW 24,005,000,000 , KRW 555.4 billion , which is around KRW 2 trillion year-to-date increase following the decline in cash from the rise in net working capital.
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As we've done in the previous year, we will continue on with the follow on portfolio rebalancing effort, including dealing with and selling non-core and inefficient assets, so that we may do our best to stabilize financial position and downsize the size of our net debt.
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Responding to your second question, I am from SK On, and I am Ahn Hyun, Head of Planning Office.
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Responding to your first question, in the European Union with the adoption of the EV related subsidies that we have seen resume in the U.K. and major countries in Europe, as well as on the back of rising crude price stemming from the Middle Eastern conflict, basically, we've seen a supportive tailwind for EV sales with Q1 2026 EV sales at around 1.2 million units, which is about year-over-year 28% increase.
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Such tailwind has supported the higher new car sales, especially for low cost and small size EVs. Going forward, we expect such sales to actually expand specifically around mid to lower end lineup.
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Now, in addition to the Hyundai IONIQ 5 and EV6, which are the current models that we ship to, we are also serving the Ford Puma Gen-E and Volkswagen Elroq, freshly shipped for 2025, which are smaller models with growing need in Europe, whose sales are uptrending compared to last year.
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Naturally, we are seeing our battery sales go up in the European market, and also quite naturally, that's driving up our utilization on a year-over-year basis.
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Thank you.
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Responding to your third question, I am Kim Yong-kwan, Head of Financial Management Office, from SK On, on ESS order pipeline.
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In terms of our ESS related endeavors, we are really focusing on maintaining steady customer relationship with our current and existing customers, but also exerting efforts to acquire new customers. We are bolstering our sales and marketing efforts, and we have in place various different solutions that satisfy different customer needs.
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We are very proactively engaging in various different order pipeline related activities against our current list of customers, including Flatiron. Once we carry on those discussions and there are more concrete details that we can share with you, we will come back to you with more information.
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Now responding to your question about our line migration or production line migration plan. At this point, it will be difficult for us to share with you any concrete details. Having said that, we will be fully mindful of our CapEx efficiencies and also to strengthen our competitive edge in the ESS business. Especially mindful of our endeavors in the North American ESS market, we will review potential line migration plans going forward.
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Now regarding how the ESS long duration business is going to contribute to our bottom line. Since most of the delivery will start to take place in year 2027, after that point in time, we are expecting profit contribution.
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Now also for the government, the tender bid, which will be the size of which will be quite similar to what we've seen during the second round of the ESS government program. The third round will take place in June. Basically our target is to achieve about the similar level as we've won for the second round at around 50%.
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The last question will be presented by Hyun-Joon Shin from Shinyoung Securities. Please go ahead with your question.
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주실까요? 아니면
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We are experiencing some technical issues at the moment, we will take the question in writing and then provide you with the answers. Please bear with us.
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Yes, we received the question in writing, and I will read the first question. The question is from Shinhan Securities. The question is: In light of the chemical sector's response to the Middle East conflict and the currently favorable market conditions, has the timeline for completing the Ulsan petrochemical restructuring been delayed, or have there been any changes to the restructuring plan?
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This is Kim Yong-soo, Head of Planning Office at SK geo centric, and I will take your question on the chemical business. SK geo centric is structurally better positioned than its peers on raw material procurement risks. Approximately 80% of our feedstock requirements are reliably met through vertical integration with SK Energy.
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Based on this feedstock benefits, we were able to make a strong earnings in Q1.
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Post-war, in response to the fall in the crude oil prices, and in order to defend the inventory effect, we are trying to optimize our feedstocks and also marketing activities.
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Next, I would like to also discuss the Ulsan complex restructuring.
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Discussions on the Ulsan complex restructuring are progressing among participating companies under an MOU framework, targeting a final plan by year-end.
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However, some divergence in stakeholder positions and also compounded by heightened cost and supply uncertainties from the Middle East, the situation is tempering the pace of negotiations.
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Because of the war, while market conditions have improved, in the near term, we do not view this as a structural recovery, with the potential startup of significant new capacity in the Ulsan region also on the horizon due to long-term supply side pressures warrant continued vigilance.
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Against the backdrop, our conviction in the need for restructuring therefore remains firm, and the final plan in terms of both scope and timing, will be determined in consideration of stakeholder discussions and market conditions.
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There was a follow-up question, and it has to do with CB gas field. Could you provide an update on the CB gas field?
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I am Hyung-kyun Kwon , Head of Management and Planning at SK E&S, and I will take your question. If you look at the CB gas field, we have FPSO, which is basically the drilling facility and LNG terminal in Darwin, where liquefaction is taking place.
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Now, the CB gas field remains in the commissioning production phase, and we are looking for any problems in the facilities, and also we are also working on integration.
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Especially if you look at the new FPSO facility, we are currently working on facility stabilization and also optimization tuning is currently underway. As we go along, we are making some maintenance and also replacements. Because of that, there are some intermittent production interruptions. We are suspending and also resuming the commissioning production at this moment. Therefore, this led to some delays.
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That said, we believe that this is an asset, a massive infrastructure asset that is going to be used for the next 20 years. Instead of ramping up the production in the short period of time, we are going to focus on stable operations and then progressively ramp up the production.
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We are the second shareholder of this gas field. With regard to the full rate production timing, we are going to work closely with the operator, Santos.
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