Geon-ki Seo: Good morning. 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 the highlights of the Q3 of 2026. First, SK enmove signed a long-term agreement with the US refinery, HF Sinclair. Under this agreement, SK Enmove will provide a long-term supply of its Group III base oil, YUBASE, which HF Sinclair will use to provide and produce its own lubricant products. In addition, in some areas of North America, HF Sinclair will have the rights to exclusively distribute YUBASE. The recent Middle East conflicts have created a shortage in premium Group III base oil supply, and against this backdrop, SK Enmove will leverage its multiple production sites to provide stable supply, and this cooperation will further strengthen its competitiveness in the global market.
Geon-ki Seo: Going forward, SK enmove, utilizing its product competitiveness and global production base, will further solidify its position as a stable and trusted Group III base oil provider. Next, SK On has achieved meaningful progress in expanding its ESS business and stabilizing its supply chain. SK On recently signed a supply agreement with US NeoVolta Power to provide around 9 GWh of LFP pouch cells. In a rapidly growing North American ESS market, this is recognition of SK On's product competitiveness and local supply capabilities. Based on this achievement, SK On will further expand its North America ESS customer base and efficiently expand its business by utilizing the existing production sites it has. In addition, SK On also signed ESS LFP cathode supply agreements with L&F and also POSCO Future M.
Geon-ki Seo: This will strengthen SK On's capabilities to source cathodes that meet North American market policies and supply chain requirements, and in the future, it will continue to upgrade its supply chain with key partners and create a stable growth foundation for its ESS business. Lastly, SK Earthon in September, started crude oil production at the Golden Camel structure, Block 15-1/05. Full development of this block started in 2024, and in only 2 years, the company was able to successfully produce oil at an earlier time than originally expected. Proven reserves at the Golden Camel structure are estimated to be around 60 million barrels, and according to the operator, Murphy Oil Corporation's plans, if additional production wells are consecutively developed, the total production volume of the block is, as it speaks to, expected to reach a maximum 25,000 barrels per day.
Geon-ki Seo: SK Earthon owns 25% of the block, and we believe this production will contribute to expanding the production portfolio in Vietnam and strengthen the company's mid to long-term profit base. Any additional structures that are discovered in the neighborhood areas will be developed linked to the Golden Camel structure in order to efficiently increase the reserves and production volume. In addition, leveraging the geographical proximity of other blocks within the Cuu Long Basin, and by sharing technology and expertise, SK Earthon will secure and efficiently develop additional resources. This wraps up my highlights for Q3. Next, let me go over our performance for Q3. In Q3 2026, revenue totaled KRW 28 trillion, 773.8 billion, a decrease of KRW 383.4 billion quarter over quarter.
Geon-ki Seo: The top line of the refinery, lubricants, and E&S business increased, but the base effect of the one-off factors recognized in the battery business in Q2 led to the decline. On the operating profit line, even though the one-off profits in the battery business were gone, the lubricants and E&S business drove performance, leading to a quarter over quarter increase of KRW 217 billion, ending up with total operating profit at KRW 3 trillion, 704.3 billion. On the non-operating side, as one-off losses such as the SKIET impairment losses and the PRS derivative valuation losses related to SK On and SKIET were eliminated, non-operating loss improved by KRW 2 trillion, 727.2 billion to KRW 190.4 billion. To provide the breakdown in detail, FX related gains were KRW 120.5 billion, product derivative losses KRW 100.5 billion, net interest expenses KRW 244.2 billion, equity method gains KRW 91.9 billion, and other losses KRW 58.1 billion.
Geon-ki Seo: As a result, net profit increased KRW 2 trillion, 944.1 billion quarter over quarter to KRW 3 trillion, 513.8 billion. Next, let me discuss our financials. As of Q3, total assets stood at KRW 99.5 trillion, which represents a decrease of KRW 6.1 trillion versus 2025 end. Liabilities were KRW 62.7 trillion, which is a decrease of KRW 6.5 trillion, and the debt equity ratio was down by 20% points at 170%. Net debt was KRW 19.6 trillion, representing a decline of KRW 3 trillion versus 2025 end due to strong operating performance and asset rationalization efforts. Next, we will go over the Q3 performance by company. Looking back on key companies and providing an outlook for the future. For the results of each company, please refer to page 6 of the presentation, and on page 7 for the look back and outlook.
Young-gyu Joo: On page 7, first, let me talk about SK Energy. Good morning. This is Joo Young-gyu, Head of Corporate Planning for SK Energy. Let me go over the Q3 performance. SK Energy's Q3 operating profit was KRW 1 trillion, 205.8 billion, which was an increase of KRW 554.6 billion quarter over quarter. Middle East uncertainties, which have continued under the US-Iran MOU to end the war, was scrapped, and attacks on Russian refineries by Ukraine have driven crude prices and refining margins to higher levels, and our utilization went up when compared to the previous quarter, during which we had a turnaround. Going forward, we expect crude prices and refining margins to show trends similar to the previous quarter. We expect high volatility based on the geopolitical situation in the Middle East and Russia.
Young-gyu Joo: Crude prices, OSP, and crack spreads still look strong, but high freight prices are weighing down on refining margins. We expect this to be a temporary spike, which recently has shown trends of stabilizing down, thus the impact on business is expected to be limited. As market conditions stay very volatile for longer, we will closely monitor the market to optimize operations in a flexible and speedy manner. Next, we will move on to SK Geo Centric.
Su-yoon Choi: Good morning. This is Chase Yun, Head of the Performance Management Team at SK Geo Centric. in Q3, supply was tight due to supply concerns on the back of regional PX capacity TA and an increase in aromatics being used for blending processes as gasoline prices surged. As a result, PX and benzene spreads increased, leading to better profits.
Su-yoon Choi: In the Q4, we believe derivative demand will decrease, but supply will remain tight due to regional PX capacity TAs and a restart of arbitrage demand to the US. Thus, the market is expected to continue to be strong to flat. As gasoline prices remain high, aromatics production is expected to decrease, and new capacity operation is expected to be pushed back, which will further support the market. However, as market volatility may remain, we will optimize capacity operation and adjust the product mix to focus on defending our profitability.
[Company Representative] (SK Innovation): Next, we will turn to SK Enmove.
Mi-kyung Kim: Hello, good morning. I am Kim Mi-kyung, Head of Corporate Planning on SK Enmove. SK Enmove posted a record quarterly operating profit of KRW 1 trillion, 90.6 billion in the Q3 as global supply disruptions kept diesel spreads elevated.
Mi-kyung Kim: Spreads may fluctuate depending on when the strait reopens, but we expect the current high levels to narrow gradually if disruptions ease in the Q4. The Middle East supply disruption has made sourcing diversification a clear priority for our customers. Our multiple production sites provide reliable supply, which is building customer trust. The long-term North American Group III supply agreement signed with HF Sinclair in August is a prime example of that trust becoming a long-term partnership. We expect the customer base and partnerships we have built to sustain solid profitability even as Middle East supply conditions normalize. We delivered solid results in 2021 through 2023, when COVID-19 and the Russia-Ukraine War disrupted global supply and have stayed above pre-COVID levels since conditions eased in 2024. Backed by a stable supply network and strong customer trust, we will protect profitability and further strengthen our market leadership.
[Company Representative] (SK Innovation): Next, we will turn to SK Earthon.
Kyoung-jun Kim: Good morning. I am Kim Kyung Jun, Head of Planning and Business Support at SK Earthon. SK Earthon's Q3 operating profit was KRW 31.4 billion, up KRW 1.5 billion QOQ, driven by sustained high oil prices. This figure excludes the Peru block. The Peru block posted operating profit of KRW 92.6 billion, up KRW 13 billion QOQ, supported by firm oil and gas prices amidst the war. In the Q4, we expect oil and natural gas price volatility amid geopolitical uncertainty. We plan to maintain daily production and secure continued profitability through stable operations at the China block and additional production while drilling at the Vietnam block. Let me now turn to key project updates.
Kyoung-jun Kim: First, at the China 17-03 block, we completed drilling of three additional production wells to sustain output, and we will continue to pursue measures to maintain production and reduce costs. At the Vietnam Block 15-1, drilling of four additional production wells and construction of production facilities at the STT field are progressing as planned. At Block 15-1/05 in Vietnam, a development block, first oil was achieved in late September, and we will ramp up production in phases as planned wells are drilled. In addition, as reported in the press, an exploration well at LDTN within the block discovered additional oil. We plan to confirm resource volume and commerciality through appraisal drilling.
[Company Representative] (SK Innovation): Thank you. Next up, we will turn to SK On.
Youngkwang Kim: Good morning. I'm Kim Young Kwang, Head of Financial Support at SK On. I will walk you through our battery business results for Q3 2026 and our outlook for Q4. Q3 revenue was KRW 1 trillion, 526.3 billion, down QOQ, and we recorded an operating loss of KRW 80.5 billion. Operating results declined from the previous quarter, which included one-time gains. However, excluding one-time items, underlying profitability continued to improve. Our fixed cost efficiency efforts are translating into tangible earnings improvement, and we continue to rebalance our portfolio to improve asset efficiency and strengthen our balance sheet. Going forward, we will closely manage market demand and profitability by customer while pushing ahead with operational efficiency and cost innovation to build a firmer base for profit improvement. In Q4, we will focus on sustaining our earnings improvement through stable, demand-driven supply and expansion of our ESS business base.
Youngkwang Kim: While the pace of EV demand recovery will vary by region and customer, in North America, we see potential for a gradual volume recovery based on key customer sales trends and policy support in certain regions. In Europe, we expect EV support policies in major countries and growing preference for locally produced batteries to provide favorable conditions. At the same time, ESS is our core growth driver. Building on the NeoVolta order and secured materials supply chain, we will strengthen execution of our North American ESS business and actively pursue additional orders. By converting existing EV production lines to ESS, we will minimize new capacity investments while raising utilization and asset productivity. Market uncertainty may persist in Q4.
Ryun-kwon Kang: Nevertheless, we will sustain our earnings improvement trend and strengthen the foundation for a mid to long-term turnaround by focusing on first, optimizing production and supply in line with customer demand. Second, company-wide cost reduction, and third, ESS order wins.
[Company Representative] (SK Innovation): Thank you. Next, we will now turn to SK Innovation E&S business.
Ryun-kwon Kang: Good morning. I'm Kang Ryun-kwon, Head of Management Planning at SK Innovation E&S, and I will walk you through the E&S business. Q3 operating profit rose sharply from the previous quarter to KRW 774.4 billion. The increase was driven by higher SMP on seasonal power demand and by stable intake of competitively priced long-term contract LNG and also Barossa commissioning volumes, which raised power plant utilization. In Q4, we expect SMP to decline QOQ as seasonal power demand eases and higher spot LNG prices to weigh on costs.
Ryun-kwon Kang: We will therefore manage earnings volatility through stable procurement of long-term contract LNG and Barossa LNG while building adequate inventories to meet winter power demand.
Soyoung Chung: That concludes our prepared remarks, and we will now move on to the Q&A session. Before taking live questions, we will first respond to questions submitted in advance through our website. From the many questions received from investors and analysts regarding this earnings release, we have selected those of great interest. We will read out the questions in order and the head of each business will respond. The first question concerns the ESS plans of SK On, the 2027 annual ESS order target, the status of global ESS line conversion, and plans for additional conversion. I would like to now invite SK On to respond.
Youngkwang Kim: Good morning again. I am Kim Young Kwang, Head of Financial Management at SK On.
Youngkwang Kim: Building on our order wins at home and abroad, including the approximately 9 GWh supply agreement with NeoVolta, we are actively negotiating additional orders with customers in North America and Korea. In North America in particular, our non-China supply chain and local production capabilities are generating a range of customer inquiries and business opportunities. On the production side, we are prioritizing the conversion and use of existing EV lines for ESS over new capacity additions. We are currently converting certain lines in Korea and North America to ESS in phases, and we will flexibly allocate capacity in line with order volumes and each customer's supply schedule. Further conversions will be decided based on a comprehensive assessment of confirmed orders and the order pipeline, the EV volume outlook of regional policy requirements, and investment efficiency.
Youngkwang Kim: In doing so, we will minimize additional CapEx while improving both our ESS capabilities and the utilization of our existing production assets. For 2027 ESS order, we see strong demand from our customers, and we have high expectations. However, when concrete details are available, we will communicate that with the market.
Soyoung Chung: Thank you. The second question concerns the 2027 oil market outlook. Ongoing Middle East conflict and geopolitical risks are raising concerns about market volatility and uncertainty. In this fight, there is a strong market interest in how to view the 2027 oil market outlook. I would like to ask SK Energy to respond.
Young-gyu Joo: This is Chu Kang Kyu from SK Energy. Allow me to walk you through on the 2027 oil market outlook. Amid continued geopolitical uncertainty, we expect market volatility to remain high in 2027. The Middle East situation could go either way, further escalation or stabilization through negotiations.
Young-gyu Joo: It is difficult to say at this point which path will prevail, but given the conditions set by both sides, experts generally expect the road to an agreement is going to be difficult. The longer the crisis persists, the less capacity remains to absorb the shock through inventories and production. As a result, even under a stabilization scenario, oil price and refining margin forecasts are edging higher over time. How long this instability lasts will be the key variable shaping the market's direction.
Soyoung Chung: This concludes our responses to the pre-submitted questions, and we will now move to live Q&A. Please note that the live Q&A will be conducted with consecutive interpretation. When asking a question, please state your name and affiliation.
Operator: [Foreign language]. Now, Q&A session will begin. Please press star 1, that is star and 1, if you have any questions. Questions will be taken according to the order you have pressed the number star 1. For cancellation, please press star 2. That is star and 2 on your phone. [Foreign lnaguage]. The first question will be provided by Hongju Shin from Shinyoung Securities. Please go ahead with your question.
Hong-ju Shin: [Foreign language].
[Translator]: Yes. Thank you, and good morning. This is Shin Hongju from Shinyoung Securities, and thank you for the opportunity to ask questions. There are three questions that I would like to ask you. The first question is related to the merger with SKIET. I would like to know what the current progress is. Is everything going according to plan? What would be the overall timeline for the company that is currently being expected? The company did put in a modified securities registration statement. If you could talk about that would be appreciated. The second question I have is related to SK E&S business. For the RCPS that you are thinking to do for the E&S business, what would be the progress there? The third question is related to your lubricants business.
[Translator]: If the war in the Middle East were to come to an end, I do think that there is some concern that as the overall lubricants market and overall dynamics do improve, that that could lead to lower profitability for the lubricants business. In terms of maintaining the level of profitability that you currently enjoy, what are the plans that the company would be engaging upon?
Gi-rak Bae: [Foreign language]
Gi-rak Bae: Yes, maybe I can take your question. This is Bae Gi-rak, Head of the Corporate Finance Planning Office at SK Innovation. As you have mentioned, yesterday, we did put in a modified securities registration statement. If you look at the main changes that we have taken into consideration, we did put in the details about how we have reviewed the merger ratio using an external third party, also some more description about what type of communications we have had with our shareholders and why we do believe as a company there is a business necessity to pursue with the actual merger. To maybe elaborate about this in more detail. As you are aware, with regards to the merger with SK IE Technology, we are not, of course, subject to the newly modified or newly amended Capital Markets Act.
Gi-rak Bae: However, we did look into the overall spirit of the act being amended. Therefore, in order to ensure that we do have verified fairness with regards to the merger conditions, we have selected a third-party agency to look at the appropriateness of the merger ratio, and this was done on a voluntary basis. The actual results of that review is something that we have put into the newly modified securities registration statement. In addition to that, we have had various forms of communication with our shareholders. There have been emails, phone calls, and also we did have the meeting with our shareholders and the general hearing. Based upon those type of communications, there were various opinions and questions that we received. We have responded to that, and the description of that type of communication is something that we have reflected into the new statement.
Gi-rak Bae: In addition to that, the company has looked at other options that would be available to us if we did not select a merger. We actually put in a more detailed understanding about why we do believe that a merger is the best option to generally enhance the overall understanding of our shareholders. That is what we have put in. With regards to the timeline going forward, which is also something that you have asked about. As you are aware, after submitting the security registration statement, we do need to wait for it to go into effect, and only after it has gone into effect would we be able to put out a more detailed and definitive timeline. Right now we are in a position in which we are actually waiting after we have submitted the registration statement to the FSS for it to go into effect.
Gi-rak Bae: Once that is finalized, I do think that we can come up with a more definitive timeline about when we will have the SKIET shareholder meeting and other schedules going forward, which we will disclose as available.
Geon-ki Seo: [Foreign language]
Geon-ki Seo: This is the CFO, Seo Geon-ki, of SK Innovation. Maybe I can address your second question about the city gas RCPS. Right now the company is in a position in which we are looking at various options available. In actuality, we have not come to a conclusion in detail about this situation. In relation to it, I do think that once more details are available, we will transparently communicate with the market.
Mi-kyung Kim: [Foreign language].
[Translator]: Yes, maybe I can address your third question. This is Kim Mi-kyung, Head of the Strategy Planning Office at SK Enmove. I think that if we look at the current uncertainties related to the supply chain, it has been an opportunity for our key customers to once again recognize the importance of having a stable supply capability in place. Therefore, from the company's perspective, based upon this very stable supply capabilities that we have built out, we are trying to strengthen our trust and confidence with our customers to be able to look into new opportunities for new and also long-term contracts, and also to expand our overall sustainable, profitable base.
Mi-kyung Kim: [ Foreign language].
[Translator]: We do recognize that maybe repeating the performance that we have had for this year in terms of our operating profit will not be easy. But we do think that we have been able to show to the market what type of fundamental competitive edge we do have as a company. With that, we are planning to try to be flexible in dealing with the changing market conditions and overall enhancing the overall profit structure that we have so that we can build a further solidified foundation for our profits going forward. Thank you.
Operator: [Foreign language]. The following question will be presented by Jin Myung Lee from Shinhan Investment & Securities. Please go ahead with your question.
Jin-myung Lee: [Foreign language].
[Translator]: Yes. Thank you very much for the opportunity to ask questions. I have altogether three. First one concerns your battery business. I understand that you have ESS market in the US. How big do you expect the market is going to be for 2026 and 2027? Also, please walk us through the ESS supply demand in the United States. My second question has to do with AIDC. I would like to know what SK On's role is with regard to SK's AIDC development business and your ESS related plans. My final third question concerns your refinery business. With OSP insurance expenses, margin pressures, and also increasing freight rates, I think that there are some concerns about your performance for Q4. Please give us some ideas about your earnings for Q4.
Youngkwang Kim: [Foreign language]
[Translator]: Yes. Thank you very much for your questions. Your first question has to do with the ESS market size, and I would like to focus on the US ESS market. First of all, thanks to government tax incentives and also demand for renewables and grid stabilizations, I believe that the US ESS market is going to enjoy a sustained high growth.
Youngkwang Kim: [Foreign language].
[Translator]: With regard to market data for 2026, the US ESS market is going to be around 80 to 100 GWh. By 2030, we believe that number is going to more than double.
Youngkwang Kim: [Foreign language].
[Translator]: With regard to supply and demand conditions, the government policies and also the shift toward non-FEOC products, I believe that there is going to be some differentiations in terms of supply and demand with local supply capabilities.
Youngkwang Kim: [Foreign language].
[Translator]: Let me continue, and answer your second question as well regarding AIDC. We believe that AI data center proliferation is leading to power demands, and also there is a growing demand for power quality and reliability. As such, we believe at our company that AIDC ESS is going to be a core opportunity.
Youngkwang Kim: [Foreign language].
[Translator]: In line with that, we are taking into consideration AIDC initiatives of SK Group and together with group entities, we are trying to generate group synergies, and we are exploring business opportunities and also strengthening product competitiveness.
Youngkwang Kim: [Foreign language].
[Translator]: To be more exact, we are collaborating with SK Telecom, for instance, and building some power network. Also we are identifying data center power demand patterns together with SK Telecom. Based on that, we are trying to develop multifunctional integrated ESS for AI data centers. As such, together with a group of fleets, we are strengthening our ESS business competitiveness.
Young-gyu Joo: [Foreign language].
[Translator]: I will take your third question. I am Joo Young-gyu from SK Energy. As you mentioned, I think that because of OSPs, insurance, and also margin pressures, projecting the Q4 market outlook is going to be quite difficult. As you rightly mentioned, OSP is down, and crack is still very firm, and the freight rates are increasing. When it comes to crude oil for Q4, I believe that OSP is going to remain relatively low, and there is going to be some limitations to the freight rates as well. Unless the crude price drops significantly, we believe that our earnings for Q4 is going to remain robust.
Soyoung Chung: [Foreign language]. Next question, please.
Operator: [Foreign language]. The following question will be presented by Jin Myung Lee from Shinhan Investment. Please go ahead with your question.
Jin-ho Lee: [Foreign language].
[Translator]: Yes. Thank you for the opportunity to ask questions. I have two questions that I would like to ask you. The first question is about total shareholder return or TSR. As your overall earnings and performance is improving, I do think that there are higher expectations about TSR going forward. So with regards to your TSR policy, when are you expecting to release it? What would be the size that you are thinking of? What type of review are you doing to date in terms of the overall progress? The second question that I would like to ask you is about the diesel market. In the case that there are export bans on the diesel side, what impact do you think that that would have on the overall operations?
Geon-ki Seo: [Foreign language].
[Translator]: Yes. This is CFO Seo Geon-ki. Maybe I can address the first question that you have. At the company level, of course, we are well aware of the expectations that the market has about TSR. As a result, right now internally, we are ongoing a process of reviewing the disclosure to our corporate value-up plans and also to set forth the details about our TSR going forward.
Geon-ki Seo: [Foreign language].
[Translator]: That has been said. I think that right now in terms of our overall stance of putting priority on financial stability and securing that is still valid. For 2026, if we look at the overall TSR plans, I think that in our policy it would be dependent upon our financial stability that we see how much our profitability improves our investment and also funding needs. All of this will be taken into consideration, and reviewed after which I think at the time, that this is finalized, we would be able to very transparently communicate this with the market. In addition, if you look at our net debt as of the end of Q3 versus the year end of 2025, we have been able to cut it back by KRW 3 trillion.
[Translator]: So we do think that there has been some tangible results that we have been able to achieve in terms of improving our overall financial profile. Therefore, our efforts in this area to further recover our overall and improve our financial profile is something that we will continue. Over the mid to long term, we want to be able to create a foundation upon which we would have more sustainable capacity for TSR. Thank you very much.
Young-gyu Joo: [Foreign language].
[Translator]: Yes. Maybe I can take your second question. This is Joo Young-gyu, Head of Strategy Operations Division at SK Energy. As you are aware, for the US, in actuality, it is the largest exporter of diesel in the world. Therefore, if there were to be a ban on exports, there would be an oversupply situation with regards to the Gulf area in the US, and that may lead to lower utilization from refineries in this area. Therefore, there could be some supply issues for gasoline and also a price increase that may take place for such reasons. In addition to that, if the US were to ban diesel exports in the case of Europe and also South America, they may look for alternative supply sources. So that could also have an impact of increasing the overall diesel price and also a crack within these regions.
[Translator]: That has been said, in early October, Trump actually came out and announced that he would not put an export ban on diesel. So in terms of the actual possibility of this realizing, we do not believe that it would be very large.
Soyoung Chung: Next question, please.
Operator: [Foreign language].The following question will be presented by Woojae Jeon from KB Securities. Please go ahead with your question.
Woo-jae Jeon: [Foreign language].
[Translator]: Thank you for the opportunity to ask questions. I am Jeon Woojae from KB Securities. I have two questions. On a personal note, I think that winning orders from NeoVolta is quite impressive. In the case of the United States, I believe that Chinese ESS is going to face some limitations, and as a result, SK On will be able to expand its ESS market in the US. So my question is, going forward, do you plan to keep converting existing EV lines to ESS and do a defensive business when it comes to ESS, or do you plan to expand the ESS business in itself? My second question concerns Mr. Trump's executive order. Since the executive order was issued, do you actually see some increasing inquiries from customers who used to use China-produced cells?
Youngkwang Kim: [Foreign language].
[Translator]: This is Kim Young Kwang from SK On, and I will take your first question. When it comes to the US market, we do believe that there is going to be an increasing demand for non-China ESS product, especially from Korea and also Europe. So we are actively pursuing such possible order opportunities. When it comes to ESS order procurement, we are taking into consideration multiple factors. For example, the EV line conversion costs as well as product productivity efficiency. On top of that, we are planning to also minimize additional CapEx. Based on all these factors, we are going to come up with optimal production sites and also volume allocation.
Youngkwang Kim: [Foreign language].
[Translator]: In the short term, we are not planning to add new capacities. However, instead, we are trying to convert existing EV lines for ESS purposes. Going forward in the long term, depending on the order volume and also market conditions, we plan to respond proactively.
Youngkwang Kim: [Foreign language].
[Translator]: Let me continue and take your second question as well. As you mentioned, as President Trump tightened China-related regulations and also restructured the supply chain, I believe that the US-based operators and also system integrators that used to use China-produced cells are paying more attention and showing interest in securing non-China cells and also other reliable suppliers.
Youngkwang Kim: [Foreign language].
[Translator]: In particular, given the risks associated with tariffs and also procurement regulations and policy uncertainties, the customers who have a high dependency on Chinese-made cells are considering cost competitiveness and also eligibility for tax incentives.
Youngkwang Kim: [Foreign language].
[Translator]: Against this backdrop, we believe that the alternatives for supply chain diversification and reliable quality and suitability for the North American market are making the Korean cells more favorable vis-a-vis the Chinese-made cells. As a result, we actually are getting a higher increase from the existing customers who used to use Chinese cells regarding the product specifications, volume availabilities, price terms, and also long-term contracts.
Youngkwang Kim: [Foreign language].
[Translator]: That said, for actual contract to flow in, we have to consider not just the regulatory issues, but price terms, local content compliance, certifications and delivery schedules, and also project-specific specifications. After all these are considered, we believe that the customers will be making their decisions.
Soyoung Chung: [Foreign language].
[Translator]: Due to time, we will take the last question.
Operator: [Foreign language]. The last question will be presented by Yujin Jeon from iM Securities. Please go ahead with your question.
Yu-jin Jeon: [Foreign language].
[Translator]: Yes. Thank you for the opportunity to ask the last question. The questions that I would like to ask are two. First is that if you look at Q3, I do understand that there are volumes that are coming in from Barossa gas field. In addition to that, because of the Middle East situation, I do believe that the supply demand dynamics relating overall gas has been changing. For the overall production that you have in sales at the E&S side for gas, what would be the current status? In addition to that, for the volume that you have, how much is actually used for the domestic power generation market, and is there any volume that you actually sell outside? The second question that I have is that there are projects for power generation capacity to be built out in Namyangju and also in Yongin.
[Translator]: If you could provide an update about those projects, that would be appreciated.
Ryun-kwon Kang: [Foreign language].
[Translator]: Yes, this is Kang Ryun-kwon, the Head of the Management Planning Office at SK E&S. To address your first question, even after the Middle East situation has emerged, if you look at our situation, we actually do not have any exposure in terms of sourcing from the Middle East. So the overall volume that we have been maintaining in terms of the handling volume has been very consistent at 6 million tons.
Ryun-kwon Kang: [Foreiugn language].
[Translator]: In terms of the overall volume that we actually source, it is dedicated to servicing the demand that we in-house have been able to secure and supplying to those clients.
Ryun-kwon Kang: [Foreign language].
[Translator]: And maybe to talk about the current progress that we have of the various projects. First, starting with Namyangju. In the case of that location, we have actually established the legal entity that is needed for the cogeneration power plant, and we have broken ground in Q3.
Ryun-kwon Kang: [Foreign language].
[Translator]: In the case of the Yongin project, in terms of the heat source and also the construction that is needed to lay out the LNG pipelines, all of that construction is going smoothly. So in Q4, we do think that we would be able to supply in terms of the overall CSP. And for CMP, which would be the main equipment that is needed for the overall facility, we do think that establishment or that construction will start next year.
Youngkwang Kim: [Foreign language].
[Translator]: With this, we would like to wrap up the Q&A session for Q3 2026 for SK Innovation. Once again, we would like to thank all of the investors, analysts, and other parties that have participated in this call. Thank you very much.
