State-owned Korea National Oil Corporation (KNOC) and Korea Gas Corporation (KOGAS) will sell off unprofitable non-core assets as part of the government’s efforts to enhance profitability and encourage an active role in the private sector for energy resource development.

According to a plan finalized by Korea’s Ministry of Trade, Industry and Energy on Wednesday, the two monopolies will dispose of their non-core assets, attract fresh investments from the private sector and bolster operations to increase their corporate value. Non-core assets defined by the ministry include those with low profitability and growth potential, as well as a minor stake. Small assets that are geographically scattered across the world will also be restructured as they create little synergy with other assets.

KNOC is running 30 projects across 21 countries, including 17 production sites and 13 exploration sites, as of the end of February. Of these, projects such as Yemen LNG, Venezuela Onado and Libya Elephant are less represented by the oil monopoly. The ministry did not disclose which assets are subject to restructuring because of any adverse effect it would have on partner companies.

Korea Mineral Resources Corporation will evaluate the performance of the overseas assets every year and determine their disposals depending on market situations. The ministry also said it would first seek buyers for stakes in the non-core assets among Korean institutional investors.

The Korean government has been studying various options to improve profitability and efficiencies of the two energy companies with overlapping businesses such as exploration and production (E&P), as part of its ongoing efforts to reform the country’s state-run energy companies.

By Seo Dong-cheol

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