Beefing up Energy Exploration

Government out to make KNOC five times bigger to expand energy supply

The government has decided to expand the Korea National Oil Corp.(KNOC) with the infusion of government investment to hike its search for energy resources, oil and gas around the world.
The decision is part of the government plan to boost the self-sufficiency rate of oil and gas to 18.1 percent by 2012. KNOC will strengthen its ties with private energy exploration firms including SK Energy among some 40 private firms engaged in oil and gas exploration overseas.
Second Vice Minister Lee Jae-hoon of the Knowledge Economy Ministry told reporters March 18 that the ministry is engaged in drawing up plans to beef up KNOC as ordered by President Lee Myung-bak who wants to accelerate the country's natural resources exploration by strengthening diplomatic relations with countries with rich in natural resources such as those in Africa and the Central Asia.
The vice minister said the ministry plans to beef up KNOC in three stages, which will be firmed up when the talk with the Ministry of Planning and Finance on the extent of the government investment is over.
The ministry's decision to expand the KNOC scale is based on President Lee's statement at the briefing session of the ministry held at Kumi, North Gyeongsang Province, March 17 that KNOC should be enlarged to step up the country's stable supply of oil and gas.
When the ministry completes its mid-and long-term vision to beef up the national oil company, it will be expanded five times the current size to rival major energy companies in the world such as BP, Shell and Standard, among others.
President Hwang Doo-yeol of KNOC said the company already has streamlined the necessary systems to expand the size of KNOC. He told reporters that what the company needs is funds just like you need fertilizer to make trees grow.
The parliament has already approved the revised KNOC Law to facilitate the expansion of its paid-in capital to 10 trillion won from the current 4.7 trillion won. He went on to add that the government has allocated 909.7 billion won and along with the 600 billion won in loan from the Korea Export-Import Bank, and additional government budget allocation and other loans such as those from the National Pension Service and retirement funds will enable KNOC to increase its capital, he said.
With an increase in its capital, KNOC will be able to expand its operation to search for oil and gas. The company has already been making moves to take over a mining block with daily production capacity of 2.5 million barrels daily and a foreign energy firm through M&As.
MOKE Minister Lee Yoon-ho presided over the Energy Industry Overseas Advancement attended by some 40 public and private energy exploration firms March 18. At the meeting, the new MOKE minister announced that the government intends to boost the self-sufficiency rate of energy supply to 18.1 percent in 2012.
He said from now on the exploration of oil and gas will be stepped up through various forms of deals including package-type ones with natural resources rich nations under what should be termed an offensive drive for energy sources.
The government plans to boost the self-sufficiency rate of energy to 522,000 barrels daily from the current 125,000 barrels per day. This year, the plan is to take over an oil field yielding 46,000 barrels of oil per day to raise the self-sufficiency rate by 5.7 percent to 171,000 barrels per day.
The government is to provide a full support to the development of 123 energy exploration projects being planned by Korean firms.
The president and the prime minister will visit the countries in the Central Asia, Africa, the Middle East and South America for oil diplomacy, the four regions rich in natural resources. nw

President Hwang Doo-yol of Korea National Oil Corp.