The CEO of SK Innovation, South Korea’s top oil refiner, on Thursday vowed to overcome difficulties facing the oil industry by overhauling its business structure.

“Through reforming our business structure and profit routes, SK Innovation will turn the current industry crisis into an opportunity for growth. We will not waste a good crisis,” said company CEO Chung Chul-khil at a press conference in Seoul.

Korean refiners ― which rely mainly on exports of its oil products for profit ― have been facing difficult business conditions in recent years, as Asian countries expand their refining capacities, the U.S. steps up its shale oil production and global demand for oil products continues to fall short of the rising supply.

“More than 70 percent of SK Innovation’s profits come from the sale of its oil and petrochemical products. However, these are also goods that are the most vulnerable to price volatility and external influences, making the company structurally weak,” Chung said.

Though SK Innovation ― after recording a deficit for the first time in 37 years in 2014 with an operating loss of 224.1 billion won ($202.5 million) ― recovered profits during the first quarter of this year thanks to improved cracking margins, the CEO said that such does not entail a positive outlook in the long term.

“The current situation may just signal a brief ‘Alaskan summer’ as the fundamental problem of global oversupply of oil products remains unchanged. We cannot focus on short-term margins but (must) undergo major structural changes,” he said.

SK Innovation will establish a business model that can keep the company afloat under any market circumstances ― cutting costs through diversifying crude sources, producing premium petroleum products as well as finding new sources of income by cooperating with overseas companies.

The oil firm is striving to concentrate on developing more high-value products that customers are willing to pay a premium for, such as Nexlene, SK’s high-performance polyethylene brand.

In terms of its oil exports, the company will focus not only on product development, but also forming “key alliances with important importers of the company’s oil products, such as Indonesia, and establishing a stable export network,” Chung said.

SK Innovation is also aiming to expand its oil development efforts in the U.S. ― where the company acquired a 75 percent stake in a major Oklahoma shale oil field last year.

As for its troubled chemicals business, the Korean refiner is looking to increase cooperation with China by establishing more joint ventures ― such as the one established between SK Global Chemical and China’s Sinopec Corporation in 2013.

“The key to (achieving all these) changes is speed,” the SK Innovation chief said. “Our company has been working to move swiftly and this is going to give us a competitive edge in the next three to five years.”

By Sohn Ji-young (jys@heraldcorp.com)