Kim Rahn is the managing editor of The Korea Times. Since joining the company in 2003, she has covered various beats including the presidential office, Seoul city government, the Bank of Korea and the tourism industry. In 2014, she won the Society of Publishers in Asia (SOPA) award for her coverage of the ordeals of migrant women in Korea.
Daewoo denies 'gas field' rumors
By Kim Rahn
Lee Dong-hee, Daewoo International vice chairman
By Kim Rahn
Daewoo International has denied a rumor it will hand over a gas field development project in Myanmar to its sister company, POSCO Energy.
Lee Dong-hee, CEO and vice chairman of the resources development company, said Monday it would be illogical to transfer the operational right to another firm.
The denial comes as the company’s stock price fell after the rumor spread last week that POSCO, the firm’s parent group, planned to transfer the project to POSCO Energy.
“It is absurd to transfer the right while we are just about to begin producing after 13 years of effort to obtain the project,” Lee said during a briefing for investors and analysts at Daewoo International’s headquarters in central Seoul.
“The project is promoted jointly by state-run firms in Myanmar, India, China and Korea. It is virtually impossible to transfer the operational right.”
Lee said POSCO has never considered doing so and will not. “If the operation right is handed over, we have to pay a huge tax to the Myanmarese and Korean governments. So transferring would do no good at all for the POSCO group.”
Around last Wednesday, the rumor arose about the natural gas field project, which is the largest overseas gas development promoted by a private company in Korea.
With the rumor, the company’s stock price fell ― it was 40,050 won on Wednesday but, when the stock market opened the next day, it plummeted to 37,250 won. It slightly rose to 37,850 won on Friday, but remained lower than before the rumor.
“We denied the rumor at that time, but people didn’t believe it. They demanded POSCO, the largest shareholder of Daewoo International, explain. So POSCO did, but people kept doubting and investors were losing money, so Lee today held a briefing,” a Daewoo official said.
After the briefing, the price rose to end at 39,400 won Monday.
Daewoo has promoted the project since 2004. It explored and discovered three gas fields between 2004 and 2006. The production will begin in July.
The company said 4.5 trillion cubic feet (cf) of natural gas is buried there, the amount which Korea can consume for three years. The firm will produce 500 million cf per year for 30 years, expecting 300-400 billion won in profit every year.
“We can say the project is Daewoo’s most brilliant achievement ever,” Lee said. “Once the production begins, we may be able to retrieve $2 billion, which we have invested so far, by 2017.”