KNOC Bracing
for Future Emergency
- Striving to become a global top 50 petroleum company

As crude oil prices have spiraled, a task of securing a stable supply of crude oil, is emerging as a crucial global subject of concern, particularly among nations, lacking natural resources, such as Korea. In reality, Korea is the world's fourth largest petroleum importer. Korea's industrial structure has shifted slowly, but few could rule out the possibility that the oil shocks of the 1970s that rocked the Korean economy could be repeated.
Amid this growing concern, Korea National Oil Company (KNOC)'s bid to bring about innovative changes is significant in consideration of its crucial mission, securing a stable supply of crude oil and the development of oil fields.
KNOC is going all out to realize its vision of becoming a world-class petroleum company leading national energy sufficiency. Under the long-term plan, KNOC has set its sights on realizing the so-called Hunt 3, 3, 3, Strategy under which the company aims at posting 3 trillion won in sales and 300 billion won in pre-tax net income, and supplying 300 million barrels of oil per annum in the year 2009, marking the 30th anniversary of its founding.
The corporation is concentrating on the three pillars of its management innovation business reform, organizational and structural reform and process reform. It is also staging a "New Autonomous Management Reform" drive, calling for, among others, a fostering of core growth engines.
As part of its business reform steps, KNOC is putting more energy into expanding investments on the development of petroleum sources, cultivating professional technology manpower and promoting overseas oil exploration projects.
All staff of KNOC is subject to an annual salary system so that it can ensure efficient organizational management and proper compensations. It has also introduced a work concentration system and a flexible work system.
The Executive vice president's offices for administration, overseas exploration & production, petroleum stockpile, engineering & construction and shelf exploration each have designated mid and long-term tasks for business reform, while each department has implemented 20 short-term innovation tasks.
KNOC, in charge of stockpiling petroleum, has let its stockpile stations stage voluntary management renovation drives on their own.
The corporation has already cut down on a large portion of the expenses of managing petroleum facilities thanks to SEE (Safety, Economy, Efficiency); an innovation drive which KNOC has conducted since 2002 to ensure the optimum safety, economy and efficiency in the operation of petroleum stockpile facilities. Making the most of the experience, the corporation plans to set up and operate task forces on management renovations at each working level.
KNOC's efforts to build up the infrastructure for introducing the digitalization of management systems and to familiarize ethical management are part of the corporation's management innovation strategy.
Its management innovation efforts have begun to pay off. KNOC has started the production of the Donghae 1-gas field on the continental shelf of Korea for the first time in the nation. In their latest feat, KNOC made another discovery last month of high-quality gas reserves, estimated at 40 billion cubic feet, in the continental shelf zone 6-1.
The corporation has made remarked achievements in oil exploration projects in Korea and abroad as it has succeeded in oil discoveries in the mining zones of such countries as Vietnam and Libya. KNOC is engaged in 19 oil exploration projects in 12 countries, 8 projects under production, two under development and 9 other projects whose exploration is being made.
KNOC has recently established a bridgehead to Kazakhstan, Russia and Brazil by forming a strategic alliance with the state oil companies of the countries.
KNOC President Yi Ok-su said his company would strengthen its management innovation efforts, concentrating on performance and capabilities in a bid to realize its target of becoming one of the global top 50 petroleum companies. KNOC will expand its oil reserves to brace for a crisis in the crude oil supply, while beefing up oil exploration projects.

Petroleum stockpile
A report on global energy forecasts, released by the International Energy Agency last October, shows that global energy needs are predicted to surge from the current 82 million barrels to 120 million barrels per day in 2030, registering an annual average growth rate of 1.6 percent. On the other hand, OPEC's portion of crude oil exports is projected to surge from 37 percent in 2002 to 53 percent in 2030, raising the specter of rising uncertainties over the global oil supply. Signs of easing crude oil hikes are not in sight. The global oil supply market is faced with a structural woe being too dependent on the Middle East for its crude oil supplies and a surge in oil demand, particularly from new emerging economies like China, has been exacerbating the supply side in the recent months.
KNOC has braced for an emergency situation. Currently, Koreas stockpile is approximately 80 million barrels of petroleum reserves, equivalent to 42-days of emergency use. The corporation plans to raise the provisions of oil reserves to 141 million barrels by 2008. To this end, the corporation plans to expand the capacity of oil reserve facilities to 146 million barrels by 2007.
If and when the emergency plan is finished as planned, Korea will be able to raise its capability to respond to a possible energy situation properly by stockpiling oil reserves for up to 60 days. The move is expected to serve as an opportunity to develop Korea as a petroleum logistics center in Northeast Asia.
Stockpiling helps to stabilize petroleum supply and secure people's livelihoods by enabling the release of stocks when regular petroleum supplies are interrupted such as the events that occurred during the Gulf War in 1990 and the US terrorist attacks in 2001. The petroleum industry is closely linked to our every-day lives in a myriad of ways, from the smallest light bulb, to airplanes, automobiles, mobile phones and computers. Industrial development in the 21st century is increasingly becoming environment- friendly and more people-centered KNOC provides information on the domestic and international petroleum markets. Its information services aims to satisfy customer needs and our R&D activities continue to enhance our competitiveness in the 21st century petroleum industry. nw