Report: South Korea mulling KNOC, KOGAS merger

The government of South Korea is reportedly considering merging Korea National Oil Corporation (KNOC) and Korea Gas Corporation (KOGAS) in an attempt to boost the profitability of the two companies. 

Four reform measures have been suggested in a report that will be presented by the energy ministry, according to news site Pulse.

The plan most likely to succeed is the merger of the two companies that would allow for the combination of overlapping sectors such as exploration and production. It is regarded as the most viable option to improve overseas resource development and overall profit structure, according to the report.

However, concerns remain over a possible transfer of KNOC’s losses to KOGAS, the report said.

The other options are selling KNOC’s resources development unit to a private company, but the government fears the asset could be sold undervalued.

Two more options include transferring KNOC’s resource development unit to KOGAS or spinning off the state-owned oil company’s overseas resources development business by creating a new company, the report said.

According to the report, the fourth option would not resolve the inefficiencies in promoting resource development projects.

Deloitte Anjin has been selected by the South Korean ministry of trade, industry and energy to look into the options of improving the profitability of the two state-owned energy businesses.

 

LNG World News Staff