A view of a meeting held early this year by Korea National Oil Corp.(KNOC) led by President Yang Su-yeong to declare the Year of the Emergency Management for 2019 to tighten the company’s operation, in particular, its overseas resources development projects.

Korea National Oil Corp. (KNOC) decided to focus on streamlining its operation by attracting investments in its projects this year and cleaning up overseas resources development projects that are unprofitable.

“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,” KNOC President Yang Su-yeong said at a press conference.

The company is seeking to sell off non-core assets and attract investment through the initial public offering (IPO) of core and large assets.
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 ($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 cost $4.08 billion (4.59 trillion won), lost $2.47 billion (2.78 trillion won). Due to such ill-advised investment decisions, the company’s debts amounted to 17.10 trillion won ($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 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 ($1.78 billion).

Korean and foreign investors are showing a keen interest in the Harvest oil field in Canada, which is 100 percent owned by Korea National Oil Corporation (KNOC), as the Korean government is seeking to sell off the oil field to the private sector.

According to the government and oil industry sources last year, Morgan Stanley sounded out investors about acquiring a minority stake in Harvest. As a precondition for investment, Morgan Stanley suggested that the investor sign a 20-year long supply contract with a North American shale oil company where the investment bank has a stake.

Korea National Oil Corp. is unhappy with the money-losing performance of its Canadian energy operations four years after buying them, but whether that means the state-owned company wants to sell all or part of them is unclear.

Two reports out of Seoul said KNOC is considering a sale of wholly owned Harvest Oil Operations Corp., which it acquired for $1.8-billion in 2009. It added to its holdings with a $525-million purchase of western Canadian assets from Hunt Oil in 2010.

"We've made an internal decision to sell the Canadian company as its losses become bigger amid lower oil prices in North America," The Financial Times quoted the company as saying. "We are also looking into other foreign assets and seeking various ways to dispose of unprofitable assets."

A view of the KNOC building in Ulsan. (Photos: KNOC)