KNOC Goes Out
for Innovation &
Efficiency

Undergoes reorganization to realize goal of becoming a petroleum major in Northeast Asia

Korea National Oil Corp. (KNOC) has conducted a massive reorganization designed to realize the goal of evolving into a global major with $2 billion in operating profits and $5 billion in sales by 2015.
The reorganization has, among others, restructured its operations from an administration-oriented structure into a project-centered one. KNOC reorganized 102 teams into 85 teams by integrating and disbanding duplicated or similar duties, while reducing decision-making from a five-step process to a three-stage one.
KNOC projects that an additional 1,000 employees are needed to accomplish the target of raising its own petroleum development rate to 5.2 percent by 2008. The corporation plans to make the most of the current manpower through the innovative reorganization. As a result, KNOC said it will endeavor to cut down on costs by augmenting new employees necessary for essential sectors.
KNOC has created new departments designed to strengthen its capabilities in the petroleum development sector and ensure efficiency ― prospecting operation division at the head office and three new branch offices in Yemen, Nigeria and Canada. The state-run petroleum corporation now runs nine branch offices in Vietnam, Indonesia, Peru, UK, Russia, Khazakstan, Houston, Singapore and Beijing.
The corporation decided to introduce a petroleum research institute designed to cultivate manpower specializing in developing petroleum-related technologies. Last year, KNOC began to beef up its capability in the petroleum technology development sector as it has operated petroleum development scholarships and internships and participated in such collaboration projects between business and academy circles as BK21 with Seoul National University.
The reshuffle has been made based on corporation officials'capability rather than resorting to the conventional seniority system. Among the major features of the latest personnel change is the activation of the "Inner Human Resource Market"regime in which each department chief chooses his or her choices among the applicants after they are given a chance to select any job they want to work.
The right to reshuffle officials of department chiefs or lower has been delegated to division and branch office chiefs in a bid to build up a responsible management regime, while a job posting will be promoted to reflect such logical appraisal criteria as professionalism, passion and convictions in selecting officials to such positions as new projects drawing much concern.
In an unprecedented move, capable female officials have been promoted to such professional postings as Northeast energy logistics business and petroleum development R&D divisions.
The reorganization is designed to strengthen competitive edge of KNOC, playing leading roles in the national energy industry, at a time when competition is getting fierce among nations across the world to secure higher chucks of petroleum resources.
KNOC President-CEO Hwang Doo-yul said, "Restructuring and organizational innovation are aimed at carrying out such projects as overseas petroleum fields, exploring domestic continental shelf, and stockpiling petroleum reserves in a more competitive way. The reorganization and reshuffle have focused on beefing up and facilitating working-level field functions rather than support postings." "It is more significant for employees to strive to realize such projects on a voluntary basis and I will work hard as CEO to make their workplace a pleasant and agreeable place,"he noted.
Hwang carried out the innovative, far-flung reorganization and reshuffle on March 15 in some four months after he took office at his inaugural ceremony held at the KNOC head office in Anyang last November.
Unlike his predecessors, Hwang is one of a few businessman-turned CEOs of public corporations. He has been with the petroleum industry for a long time as he has held such posts as SK Corp. adviser before being appointed to become KNOC president.
LONG-TERM STRATEGY 'CHALLENGE 20-20'― KNOC has strived to realize the goal of becoming the global 50 petroleum company with $2 billion in operating profits and $5 billion in sales. The detailed goals of the long-term plan follow: $2 billion barrels in petroleum deposits, 380,000 barrels per day in production, 141 million barrels in stockpiling, 5.5 trillion in sales and 1.9 trillion won in operating profits.
The long-term plan, dubbed "Challenge 20-50"has been revised from the previous strategy "Hunt 3-3-3,"in accordance with the need for establishing a new long-term plan and reflecting "bottom-up"ideas suggested by its executives and staff. In the long-term perspective, KNOC plans to beef up petroleum development and production simultaneously,; diversify business areas by implementing such new energy technology projects as "Oil Sand Project"and GTL project,; and forging strategic alliance with such countries as Russia, Kazakhstan, Iraq, and Yemen.
KNOC will attach priority into ensuring global management by actively penetrating areas considered as strategic strongholds. To this end, the corporation will solidify its efforts to develop areas other than the Middle East and the Strait of Hormuz, while diversifying development to the untapped areas of oil exporting countries. It will seek to make its entry into strategic areas through collaboration among governments.
The areas being developed by the corporation as strategic strongholds are Western Kamchaka in the Northeast Asia stronghold; Indonesia and Vietnam as the Southeast Asian center; Yemen, Oman, Iran and Iraq as the Middle East stronghold; Benin, Nigeria and Guinea as the Western African stronghold; Kazakhstan, Uzbeksitan and Azerbaijan as Caspian Sea stronghold; and Canada, Peru, Brazil and Granada as the Americas center.
KNOC plans to expand proprietor's investments while making non-proprietor's investments simultaneously. The company will make efforts to raise its investment stake from the current 10 percent to 50 percent.
The corporation is seeking to strengthen its capabilities to secure mining rights by forming alliance with strategic countries and international majors, while trying to form consortia with Korean energy companies to make their joint entry into foreign countries.
Currently, KNOC is participating in 32 petroleum development projects in 15 countries ― six petroleum production, four development and 22 prospecting projects. As of June 2005, the corporation has secured 3.13 million barrels of petroleum reserves out of Korea's total deposits estimated at 697 million barrels. KNOC witnessed recoverable reserves soaring 175 percent from 110 million barrels from 1998 to 310 million barrels in 2005. nw

Korea National Oil Corp. (KNOC) President-CEO Hwang Doo-yul

A gas field platform operated by KNOC.