KNOC expands overseas to secure resources

By Kim Jae-won

The state-run Korea National Oil Corp. (KNOC) is leading the way to secure natural resources for the country.

KNOC has turned its eyes overseas and as of September, the company is engaged in 44 oilfield drilling projects ― 12 sites for production, four for development and 28 for exploration ― in 16 countries.

It also plans to produce 300,000 barrels of crude oil daily by 2012.

The company has completed four merging and acquisition deals since 2009. KNOC acquired SAVIA-Peru, the largest private oil production and exploration company in Peru in February 2009 with a 50 percent controlling stake. SAVIA-Peru owns the right of the daily production of 20,000 barrels and is developing 10 offshore fields that potentially hold a combined 690 million barrels. This was the first large-scale acquisition of a foreign oil producer by a Korean firm.

Subsequently KNOC headed north to buy Harvest Energy in December last year, an oil producer and refiner based in Calgary, Canada. It has oil fields across Alberta and British Columbia. As of early this year, Harvest Energy has 219.9 million-barrel in oil reserves along with oil sands which may hold an estimated reserve of around 1 billion barrels and coal bed methane (CBM) as well.

In addition, KNOC bought Kazakh oil developer Sumbe that owns two oilfields in western Kazakhstan in December 2009. The Arystan oil field, which is under test production, has proven reserves of 5 million barrels and probable reserves of 57.8 million barrels. KNOC expects its daily production from Arystan to reach 10,000 barrels in 2012 and rise to 20,000 barrels in 2014.

KNOC also secured a 90.2 percent stake in Scotland-based Dana Petroleum last month. With such stake ownership, the Korean supplier of petroleum products has the right to buy the remaining shares even if shareholders are unwilling to sell.

KNOC made a $28 billion hostile takeover bid in Aug. 20 for the explorer after its original takeover offer was rejected. KNOC said its offer received valid acceptances from 64 percent of Dana shareholders as of Sept. 24, marking Korea’s first successful hostile M&A by the state-run energy company.

CEO Kang Young-won’s leadership is behind the aggressive management. Kang has become a role model for KNOC employees for his passion and dedication to his job. He also adopted a ubiquitous management style at the firm by conducting his duties on a real-time basis.