SEJONG, March 7 (Korea Bizwire) – South Korea’s state-run energy resource companies will move forward with their restructuring efforts this year as part of the government-led plan to streamline operations in the midst of low global oil prices, the commerce ministry said Tuesday.
At a meeting convened by the Ministry of Trade, Industry and Energy in Seoul, the Korea National Oil Corp. (KNOC) will sell its non-profitable assets and streamline its business portfolio to secure 1.7 trillion won (US$1.48 billion) in 2017, up from the previous year’s 1.5 trillion won.
The Korea Resources Corp. (KORES) will also reduce its assets and cut its workforce to generate 800 billion won this year, up from 200 billion won a year ago.
The two companies are subject to the government-led restructuring program on energy developing corporations announced last year.
During the former Lee Myung-bak administration, the government put its policy priority on securing overseas resource projects to cope with higher oil prices. The KNOC and KORES spearheaded the move, as they ran some 100 exploring operations outside Korea.
But a freefall in oil and other resources prices last year weighed heavily on the companies and pushed up their debt ratios, with that of the KNOC skyrocketing to 453 percent in 2015 from 64 percent in 2007.
Following tough restructuring efforts, the KNOC reported its first quarterly operating profit in two years during the October-December period, while KORES saw its net deficit halve to 987.4 billion won last year from 2 trillion won in 2015.
The two companies will not consider recruiting new workers until their balance sheets improve further.