KNOC jolts global rivalry for oilfields

This is the fourth of a series of articles featuring Korea’s best public organizations, state-run agencies and government-backed corporations selected on surveys among experts. ― ED.

By Kim Tae-gyu

When Lee Myung-bak was inaugurated in early 2008, Korean-owned facilities produced just 4.2 percent of the oil and gas the country consumed.

In two years, the nation’s fuel production more than doubled, rising to 9 percent in 2009 and reaching a double-digit rate for the first time at 10.8 percent the next year.

Behind the high-rising figure is the Korea National Oil Corp. (KNOC), which promises to further boost production to 13 percent this year and 18 percent by 2012.

``As the world stages stiff competition to get raw materials, especially oil, it is very important to procure them stably. Toward that end, we need to secure the stakes in overseas oilfields,’’ a KNOC official said.

``As of the end of this May, we are involved in up to 210 projects exploring and developing oilfields in more than 20 countries around the world. By 2019, we hope to raise the self-sufficiency rate to 30 percent.’’

Korea does not produce a drop of oil in its own territory but Asia’s fourth-largest economy consumes plenty as the world’s sixth-largest oil importer.

``When we set up a long-term plan to secure more energy sources under our control midway through 2008, merely 50,000 barrels of oil a day were pumped out at our oilfields,’’ the official said.

``Yet, the amount has now increased by more than four times to 201,000 barrels. The acquisitions of big global corporations also played a big role in the successful achievements over the past years.’’

The state-run agency acquired Dana Petroleum late last year in a hostile takeover after negotiations with the British oil firm fell apart.

Dana produces more than 50,000 barrels oil every day. In 2009, the KNOC also acquired Harvest Energy of Canada.

Earlier this year, the Anyang, Gyeonggi Province-based outfit snapped up a 24-percent stake in a Texas shale oil block from Anadarko Petroleum Corp., one of the largest oil-related deals of late.

KNOC has another nugget as far as securing crude is concerned _ it signed a memorandum of understanding (MOU) this year with Abu Dhabi National Oil under which both parties will participate in oilfield development in the United Arab Emirates beginning in 2014.

The MOU is expected to give KNOC access to reserves of more than 1 billion barrels of oil, enough to meet the demand of Korea for a full year.