Kang Seung-woo is the Business Desk editor at The Korea Times. Prior to this position, he covered politics, national affairs, finance and sports.
MB's 'energy diplomacy' at center of dispute
By Kang Seung-woo
Lee Myung-bak
By Kang Seung-woo
Former President Lee Myung-bak’s so-called “energy diplomacy“ has been called into question after tens of billions of dollars were wasted on various overseas resources development projects.
Lee, who took office in 2008 through 2013, “ambitiously“ sought to secure energy assets across the globe, aimed at enhancing the nation’s energy self-reliance.
However, critics from opposition parties and civic groups claim the administration’s energy policy was merely a political show to burnish his legacy.
The National Assembly has investigated the energy diplomacy since December.
The heaviest blow to Lee was the acquisition of Canada’s Harvest Operations.
Korea National Oil Corp. (KNOC) took over the Calgary-based oil producer and its debt-ridden affiliate for $4.1 billion (4.55 trillion) in 2009 ― one of the largest acquisitions of a foreign oil producer for the state-run company.
KNOC just wanted the Operations, but the Canadian firm’s shareholders made the purchase of its subsidiary, North Atlantic Refining Limited (NARL), a precondition for the acquisition.
However, with NARL suffering an annual loss of 100 billion won, KNOC sold its 100 percent ownership in the refinery to American merchant bank, SilverRange Financial Partners, last year for 33.8 billion won ― although KNOC had poured 2.09 trillion won ― as part of the government’s drive to reduce the debts of state-run firms. Thus far, KNOC has lost 3.7 trillion won.
Along with the bungled investment in the Canadian company, the Lee administration bought Dana Petroleum, a British oil company, in a 4 trillion won hostile takeover in 2010.
Although the acquisition has been seen as one of the Lee administration’s few successful projects, Rep. Boo Jwa-hyun of the main opposition New Politics Alliance for Democracy said KNOC bought the firm ― capitalized at 2.9 trillion won ― at an inflated price,.
Lee also ordered massive investments in many countries including Peru, Panama and Mexico, but these investments also lost money.
According to opposition lawmakers, the Lee government poured 40 trillion won into oversea natural resource development projects, but collected only 5 trillion won, or 13 percent, of the total investment in returns.
However, Lee said it was too early to assess his projects.
“Energy diplomacy involves long-term projects that take around 10 to 30 years to see results,” Lee said in his memoir, released this month.
“I think evaluating and challenging my energy diplomacy with less than two years having passed since I left office is like seeking hot water under cold ice,“ he said.