Korea National Oil Corp. (KNOC) is pushing hard to attract investment in its blue-chip assets and liquidate overseas resources development projects that are incurring losses.
KNOC president Yang Su-yeong, who took office in March last year, held a press conference on Jan. 7 and said, “Currently, we are carrying out restructuring to streamline workforce and assets and we will come up with measures to improve the company’s financial structure by the end of this month.”
The company is seeking to sell off non-core assets and attract investment through the initial public offering (IPO) of core and large assets.
The KNOC has declared 2019 "the year of emergency management," and is undergoing an intense restructuring process. The company’s total losses incurred from failing overseas resource development projects came to 9.70 trillion won (US$8.61 billion) as of the end of 2017, the highest figures among state-run resource developers. In particular, its Harvest oil development project in Canada, which costed US$4.08 billion (4.59 trillion won), lost US$2.47 billion (2.78 trillion won). Due to such ill-advised investment decisions, the company’s debts amounted to 17.10 trillion won (US$15.19 billion) and its debt ratio reached 700 percent as of the end of 2017. The KNOC is proceeding with a damage lawsuit against the then CEO.
The company is planning to purse an oil field development project in the United Arab Emirates (UAE) that has proven business value. It has secured 68 million barrels of oil reserves at Area 1 of the Haliba field in the UAE. Yang said, “When the Haliba field starts commercial production in the second half of this year, 12,000 barrels of oil will be additionally produced a day. We will also participate in the project of Abu Dhabi Company for Onshore Oil Operation (ADCO) by exercising the right to demand share purchase.”
The KNOC will also carry out a new project to explore South Korean continental shelves. The company will explore the nation’s continental shelves located in the East Sea, including Block 8 and Block 6-1 North, within this year. These regions are highly likely to be blessed with natural resources, such as petroleum and gas, according to exploration results.
The KNOC will continuously proceed with “Northeast Asia oil hub” project that calls for establishing commercial petroleum storage facilities in Ulsan and Yeosu. This is a national project that creates large petroleum storage facilities with a capacity of 24.13 million barrels by 2025 with an investment of 2 trillion won (US$1.78 billion).