Pettersen, who fired a course-record 63 Friday, is at 13-under 131 after 36 holes at the Sky 72 Golf Club.
Pettersen finished the front nine at even par and then carded four birdies on the back nine, including the final two holes.
Ryu took a bogey on the 17th hole and finished the round at 2-under 70. Se Ri Pak shot 67 to take third place.
Karin Sjodin fell apart with two bogeys and a double bogey on the back nine and ended the day in 10th place, eight strokes behind Pettersen.
Notable deaths of 2014 [PHOTOS]