A view of Korea National Oil Corp. headquarters in Ulsan. (Photo: KNOC)

Korea National Oil Corp. chalked up $2.5 billion in sales, $490 million in operating profit and a $70 million net loss on a consolidated basis last year.

The state-run E&P company saw sales decline $350 million over the previous year, influenced by a 10 percent drop in crude oil prices, but operating profit remaining stable to $490 million, similar to last year’s level, on the back of a drop in cost of sales and general administrative costs like intensive cost controls over production facilities.

These were contained in the outcomes of KNOC’s 2019 business performance, which were confirmed by a board of directors’ meeting held on Feb. 28.

KNOC’s 2019 net loss stood at $70 million, a more than 93 percent drop over a $1.05 billion loss in 2018. It represents the lowest net loss in nine years .

The improvement was owed to KNOC’s self-rescue efforts such as retrenchment and the early production of oil in the Haliba oil field in the United Arab Emirates, which had been made since the E&D company entered an emergency management mode in March 2018.

KNOC’s intensive retrenchment management contributed to a $180 million drop in borrowings, enabling the company to hold debs equivalent to a $30 million rise, but the debt ratio surged 733 percentage points over the previous quarter to 3,021 percent due to a $170 million decline in capital, caused by after-tax losses and derivative-linked fund losses.

Management’s shift into a positive note was attributable to the recovery of bonuses related to a Nigerian project, the early production of the Haliba oil field, the solving of the pending Kurdish issues, and the prolonging of the production of the Donghae Gas Field.

KNOC said the company will continue efforts to rationalize non-core assets and attract financial investors this year following the signing of disposing of the Tolmount Block of the North Sea this past January.

Crude Oil Price Drop Eased by U.S. Interest Rate Cut

International oil prices based on Brent Crude dropped on March 3 due to the possible global economic recession, caused by the spread of COVID-19 and outlooks of rising U.S. oil stockpiles, but the decline was eased because of the possibility of the OPEC’s additional production cuts.

International crude oil movements, released by Korea National Oil Corp., showed that Brent Crude fell $0.04 over the previous day to $51.86, West Texas Immediate (WTI) crude rose $0.43 to $47.18 and Dubai crude move higher $1.14 to $51.72.

Despite the U.S. Federal Reserve’s interest rate cut, the crude oil market was analyzed to show signs of signaling that COVID-19’s impact on the global economy was worse than expected.

The U.S. central bank’s latest 0.5 percentage point cut in benchmark interest rate amounted to a bigger one than the normal adjusting of a 0.25 percentage point drop.

The bigger-than-usual interest rate cut may be construed as a signal that the effects of the real global economy by COVID-19 were more serious than expected.

U.S, crude oil stockpiles were predicted to surge 3.3 million barrels as of Feb. 28 over the previous week. Petroleum and middle distillate stockpiles were forecast to drop 2.1 million barrels and 1.8 million barrels, respectively.

The Joint Ministerial Monitoring Committee (JMMC) of the OPEC (The Organization of the Petroleum Exporting Countries) on March 3 recommended a cut of 1 million barrels per day, more than 600,000 barrels per day, set tentatively earlier.

Russia was analyzed to accept the recommendation affirmatively.