By Ryu Jin
Staff Reporter
A state-run oil firm has set out to increase in size as part of efforts to help secure crucial energy sources in a more stable manner.
According to the Ministry of Knowledge Economy Tuesday, President Lee Myung-bak told government officials the previous day that the Korea National Oil Corporation (KNOC) should be at least ``five times bigger’’ than its current size.
While the KNOC’s legal capital is 10 trillion won (roughly $9.85 billion), its paid-in capital stays at around 4.7 trillion won. ``This is not a small amount of capital for an ordinary company,’’ a company official said. ``But, compared with global oil giants, it is very small.’’
The state oil firm ranked 98th among all companies in the industry worldwide as of 2006, according to the Petroleum Intelligence Weekly, a U.S.-based industry magazine.
South Korea, which relies heavily on imports for its crude demand, aims to boost its oil and gas self-sufficiency level from 4.2 percent in 2007 to 5.7 percent this year by concentrating development efforts in Russia, Central Asia, Africa and South America.
However, the KNOC’s daily production stays at just around 50,000 barrels, less than 1 percent of the production of ARAMCO, the world’s No. 1 petroleum company based in Saudi Arabia, which produces 10.5 million barrels a day.
Although the company has sought to acquire foreign firms, its attempts so far have been unsuccessful. For example, it recently made a bid to acquire the UK-based fossil fuel exploration firm Burren Energy in vain.
The KNOC has also been facing difficulties in acquiring business opportunities as it has been pushed out by major global firms.
In Iraq, the South Korean firm tried to grab a chance to develop oil in the southern part of the war-torn country but the project will likely fall in the hands of major firms with daily production of over 200,000 barrels.
According to a three-stage government plan for overseas resources development, the KNOC’s daily production will increase to 90,000 barrels, at best in 2011, far distant from the goal of making it ``five times bigger’’ than now.
``President Lee’s policy direction is quite appropriate given the fierce global competition to secure energy sources,’’ said a ministry official. ``We will map out various measures, including capital increase to build up the size of the state-run oil company.’’