Startup Mou Form

							[Attachment]



      Disclosure on Acquisition of

               Inchon Oil Refinery

                     2005. 9. 2


                 SK Corporation
Disclaimer
 This material has been prepared by SK Corporation for distribution to its shareholders and
 investors solely for the purpose of providing information in respect of the current status of
 the acquisition of the Inchon Oil Refinery that is being conducted pursuant to the Public
 Bidding Procedures.

 SK Corporation has been selected as a preferred bidder in respect of the aforementioned bid
 for the acquisition of the Inchon Oil Refinery, and the terms and conditions of the acquisition
 may be adjusted following the company’s detailed due diligence and negotiations for the
 definitive agreement.

 SK Corporation makes no representation whatsoever as to the accuracy or completeness (or
 otherwise) of the information contained in this material, and herby specifically and expressly
 disclaims any and all liability for any loss or damage you (including shareholders, investors
 and any other person or entity) may suffer relating to or in reliance upon it. You (including
 shareholders, investors and any other person or entity) are responsible for making your own
 independent inquiry, investigation, analysis and decision, and SK Corporation makes no
 representation whatsoever relating to the future plans, inferences, prospects, profitability or
 appropriateness in connection therewith.

 This material must not be relied upon in connection with any investment, and cannot be used
 in any action, arbitration, audit, hearing, investigation, litigation or suit as evidence in
 connection therewith.
1. Purpose of Acquisition
 Increase SK Corporation’s value by securing platform for growth, realizing
 synergies, and strengthening competitiveness
                   Develop into a major player in the Asia-Pacific region by achieving
                   economies of scale
                    Broaden market influence in the Asia-Pacific region and strengthen international negotiating
 Secure Platform    power
   for Growth       Increase the profitability of Petroleum/Petrochemical businesses and boost Exploration &
                    Production business performance
                    Expand business operations by forming joint ventures with China and Middle-Eastern
                    oil-producing countries
                   Create synergies by applying SK Corp.’s industry expertise to IOR*
                    Oil purchasing/trading (increase in economic benefits): Gain leverage in oil purchasing
    Realize         power/export product pricing through enhancement of production capacity/influence
   Synergies        Production: Optimize structural organization of facilities, improve both existing facilities and
                    operational efficiency
                    Achieve cost-savings via the increase in efficiency through the integration of logistics
                    (distribution/transportation)

                   Increase competitiveness through quick normalization of IOR
                    Provide a swift solution against shortage of refinery facilities in the region caused by a
   Strengthen       rise in demand for refined products in countries such as China and India

 Competitiveness    Strengthen competitiveness by upgrading facilities
                    - Increase production/export sales volume of light distillates

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                    * IOR = Inchon Oil Refinery
2. Acquisition Amount
 Paid-in Capital: 1.6 trn KRW (5,000 KRW/share, SK Corp.: over 90% share of IOR)
 Underwriting of Corporate Bonds: 1.6 trn KRW (interest rate: 6%/year)
  • Upon the approval of the court, the timing of the issuance of corporate bonds and the terms thereof will be mutually
    consulted, taking into account the capital requirements, the long- and short-term investment plans and the future cash
    needs of the company
 The remainder of the total acquisition cost (after the repayment of debts) will
 stay in IOR in the form of internal cash
  • The amount of debt to be repaid as stated in the B/S (value as of March 31, 2005): 639.744 bn KRW
  • The aggregate amount of debt to be repaid pursuant to the original reorganization plan of IOR
    (as of March 31, 2005): 876.122 bn KRW
  • The aggregate amount to be paid in respect of the unsettled and/or pending liabilities is estimated to be approx.
    30 bn KRW at the maximum (internal estimation)


  The remainder of the total acquisition cost (after the repayment of debts) will stay in IOR
  as internal cash, and will be used by IOR accordingly to strengthen competitiveness and
  improve financial structure.


    SK Corp. has been selected as a preferred bidder. The final acquisition cost and final debt
    to be repaid to creditors will be confirmed only after the completion of detailed due
    diligence, execution of the definitive agreement, and obtainment of the necessary court
    approvals, etc.

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3. Investment Value

                EBIDTA Multiple, DCF Valuation: Approx. 0.9 trn KRW (internal estimation)
    IOR
   Value        Replacement Cost: Approx. 2.8 trn KRW


              1. Oil purchasing (higher economic value): Benefit from SK’s oil purchasing
                 networks, better credit ratings, and economies of scale
              2. Recover IOR’s export competitiveness: Utilize SK’s overseas networks to boost
                 profitability
              3. Increase efficiency of IOR’s production: Improve efficiency of CDU and
  Synergy        facilities/technical process
   Value      4. Enhanced export prospects for Petrochemical business (BTX): Increase export
                 product price and sales volume, expand target markets
              5. Improve trading capabilities: Strengthen overseas market competitiveness
                 through increase in sales volume and economies of scale
              6. Save costs in all areas such as transportation, distribution, and R&D through the
                 integration of logistics

               Secure status as a major player in the Asia-Pacific region
  Strategic
   Value       Solidify export competitiveness/market influence to become a global player



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