The rating on Korea-based SK Energy reflects the company's leading position in Korea's downstream petroleum market, extensive distribution and marketing network, and limited competition in the domestic market. However, the rating is constrained by fundamental cyclicality in the R&M industry, as well as the exploration and production (E&P) industry. Furthermore, the company's overall financial risk profile, including capital structure and cash flow protection measurements, is not yet commensurate with the current rating. Although this situation is improving, the existence of a weak sister company, SK Networks Co. Ltd., with which SK Energy shares a close business relationship, is also a constraining factor on the current rating. SK Energy is the largest oil refiner in Korea with crude-oil refining capacity of
