Unwise Investments
The Korea National Oil Corporation (KNOC) and the Korea Gas Corporation (KOGAS), Korea's state-run energy development companies, are planning to invest 4.28 trillion won (US$4.06 billion) in overseas natural resources development projects determined to be unprofitable. No less than 26 trillion won (US$24.7 billion) has already been poured into these projects by the former Lee Myung-bak administration, and the decision to engage in additional investment is stirring up controversy.
According to Democratic United Party (DUP) lawmaker Jun Sun-ok, a member of the Trade, Industry and Energy Committee of the National Assembly, the two companies are going to invest 4.2856 trillion won (US$4.0728 billion) in 21 such projects until 2018.
According to her data, KOGAS is investing 11 billion won (US$10.4 million) in CNG filling station construction and storage cylinder manufacturing projects in Uzbekistan, and a city gas project in Maputo, Mozambique. Also, it is going to spend 8 billion won (US$7.6 million) on the already failed AD7 gas and oil field exploration project in Myanmar, and 180 billion won (US$170 million) on similar projects in Uzunkui, Uzbekistan, and Umiak, Canada. The KNOC will invest 47 billion won (US$44 million) in gas and oil field exploration in West Fergana and Chinabad in Uzbekistan, and the EPE-7 in Columbia.
According to data that the KNOC submitted to DUP lawmaker Choo Mi-ae, the corporation incurred losses of more than 300 billion won (US$285 million) on 10 exploration projects between 2008 and 2012. “Besides, the 450 billion won that KOGAS invested in the Akkas and Mansuriyah regions is unlikely to be recovered due to the ongoing battle between the IS and the Iraqi government forces,” she added.