The Korea National Oil Corporation (KNOC) has made continuous investments in the development of natural resources abroad in an attempt to add to the national financial resources and strategic petroleum reserves of Korea. As a leading natural resources developer representing the country, the KNOC is planning to redouble its efforts for overseas resources development this year, which is one of the top-priority agenda items of its incoming government.
The corporation has been engaged in overseas natural resources development since 1980. It has participated in a number of projects in the United States, Norway, Netherlands, Vietnam and many more and now is running 240 business sites in 24 countries, 102 of them producing crude oil. Its self-development rate for oil, according to the statistical data of the Ministry of Knowledge Economy, more than tripled from 4.2% to 13.7% between 2007 and 2011.
The KNOC’s predecessor, Korea Petroleum Development Corporation (KPDC), was founded in March 1979 to better develop petroleum resources at home and abroad, stockpile oil and improve the industrial distribution structure. Three and seven years later, the Korea Oil Drilling Corporation and the Korea Oil Pipeline Corporation were established as its subsidiaries, respectively.
In December 1987, the KPDC discovered gas in the continental shelf of Korea for the first time in history. It completed the construction of above-ground storage tanks in Seosan City, North Chungcheong Province in 2005 and issued its first oil development fund in the following year. It also set up the Energy and Petroleum Technology Institute in February 2006 as the only corporate research organization in Korea dedicated to petroleum development while putting into operation another storage site in Yeosu City, South Jeolla Province in 2007.
Its Vietnamese office was opened in 1992 and the Oil Development Center in 1995. Its local subsidiaries in the UK and Indonesia were established each in 1996 and 1997 by the name of KCCL and KSL. It also discovered a large quantity of petroleum in the 15-1 drilling site in Vietnam in 2000 and, in 2008, acquired producing well assets in the Gulf of Mexico from the United States while signing concessionary contracts for eight oil drilling sites with Iraq’s Kurdistan Regional Government. In December 2009 and June 2010, it took over Sumbe in Kazakhstan and Dana in Britain, too.
Korea’s first overseas petroleum development project dates back to 1981, when KODECO Energy Corporation set foot in the Madura Oil Field in Indonesia. The project launched three years later in the Marib Oil Field, Yemen, in which the KPDC and SK Corporation took part, is one of the most frequently cited success stories of Korea’s resources development efforts abroad. The oil field started its commercial production back in 1987 and is producing crude oil even at this moment.
In the meantime, the KNOC was making cautious preparations at that time to develop the East Sea-1 Continental Shelf Gas Field in Korea. It conducted assessments with different domestic and foreign organizations and exerted great efforts to make the development project successful. The expertise and know-how acquired through the project have served as a valuable asset for it up to this date in terms of oil and gas field evaluation, design of production facilities, etc.
Since 2000, Korea’s petroleum development projects have been led mostly by the KNOC and SK Corporation. The two companies have thrived worldwide through a series of large-scale projects, including those at the East Sea-1 Gas Field, the Elephant Oil Field in Libya, and the 11-2 and 15-1 Oil Fields in Vietnam.
The state-owned oil company held a vision declaration ceremony for win-win growth on January 28, 2013 at its main office located in Anyang City, Gyeonggi Province. “Today, we proclaim our vision of win-win growth to share our prosperity with small and midsize enterprises,” said KNOC president Seo Mun-kyu there, adding, “We’re going to achieve our seven strategic goals through three strategic directions as early as possible so that we can remain the most reliable partner of small businesses in the industry.”
According to the company, the three strategic directions are to help smaller business partners enhance their global competitiveness, to foster fair trade practices and to spread the culture of shared growth. The seven action plans to meet the goals are divided into: further support for the commercialization of promising technologies; assistance in global market penetration; expansion of profit sharing; more purchase of products manufactured by local small businesses; maintenance of fair subcontracting practices; pursuit of mutual prosperity; and enhancement of specific systems to this end.