Only 40% of Investment Recouped
People Power Party lawmaker Koo Ja-geun remarked on Sept. 20 that state-run energy companies invested US$38.88 billion for overseas resources development and recouped only 40 percent of the investment until the end of last year. The recouped portion includes profits, dividends and asset disposal proceeds. On the other hand, private-sector energy companies’ figures amounted to US$39.19 billion and 84.5 percent during the same period.
As of the end of 2019, the state-run and private-sector companies took part in 427 overseas resources development projects in 65 countries. Those consist of 119 for oil and gas and 308 for mineral resources.
Korea National Oil Corp.’s investment and recoupment were US$21.55 billion and 51.1 percent. It was participating in 26 projects, including West Fergana & Chinabad in Uzbekistan in which nothing was recouped. At the Harvest oil field in Canada, the corporation invested US$4.08 billion and only US$34 million came back.
Korea Gas Corp.’s were US$10.76 billion and 33.8 percent. Its 21 overseas projects included 10 with a zero return at the end of 2019. In the Gladstone LNG project in Australia, the biggest of those, the corporation invested almost US$3.97 billion and the payback stood at 8.9 percent.
Korea Resources Corp. invested over US$4.78 billion in 22 projects and recouped only US$698 million. Nothing came back in seven and only US$30 million out of US$1.53 billion was regained at its largest Ambatovy nickel project. At the Boleo and Cobre Panama copper mines, it recovered just US$181 million and US$127 million from US$1.53 billion and US$746 million, respectively.
Korea Electric Power Corp. and its subsidiaries engaged in 13 projects in five countries. Their investment amounted to US$1.83 billion but recoupment stood at US$200 million.
The poor performances are because those corporations’ asset values and profits plunged in 2014 and later, when the prices of resources such as petroleum continued to fall. Also, those are because of resources sold at excessively low prices and the lack of feasibility that led to halted or delayed production. The corporations’ inefficiency, lack of capability and imprudent investment relying on borrowings are also mentionable.