Debt Ratio Estimated to Exceed 7,200%

KNOC head office located in Ulsan City

The debt ratio of Korea National Oil Corp. (KNOC) is estimated to exceed 7,200 percent this year. This is because its profit is plummeting due to low oil prices and COVID-19 and the following economic recession are hindering its asset disposal. Previously, the corporation failed in a series of overseas resources development projects and its debt soared. Although it has made a lot of restructuring efforts, it is now in a situation in which it cannot make things right on its own.

KNOC recently announced that its debt ratio for this year is estimated at 7,240 percent. The ratio was 3,021 percent in 2019. Although it said earlier that it would lower the ratio to 500 percent by restructuring, COVID-19 and many other adverse factors appeared all of a sudden to thwart the plan.

The corporation also announced that the ongoing recession is delaying its asset disposal, the very key part of its restructuring plan. Besides, the current international oil price of US$40 or so per barrel is much lower than its break-even point, US$70 per barrel.

Korea Resources Corporation and Korea Gas Corporation are in the same situation as KNOC. The former’s capital impairment has continued since 2016 and it is requiring additional assistance from the government for better financial conditions. The latter recently said that the profitability of its overseas projects is on the decline due to the dropped oil price.

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