Despite Asset Sales and Staff Reductions... Korea National Oil Corporation Still Marked by Deficits

Net Loss of $70 Million Last Year

[Asia Economy Reporter Moon Chaeseok] Korea National Oil Corporation (KNOC) has yet to escape the 'quagmire of deficits.' Despite tightening its belt to shake off the failed overseas resource development projects initiated during the Lee Myung-bak administration, it has yet to find a definitive solution.

According to KNOC on the 10th, its consolidated operating profit last year was $490 million, the same as the previous year. During the same period, the net loss was $70 million, a decrease of $980 million compared to the previous year. This is the lowest level in nine years since 2011.

Total sales amounted to $2.5 billion, down 12.3% from the previous year. This is because the average futures price of West Texas Intermediate (WTI) heavy crude oil, which accounts for the largest portion of KNOC's performance, fell from $64.9 in 2018 to $57.04 last year.

KNOC has continued efforts to reduce costs, including cutting 43 staff members last year (from 1,352 to 1,309), reducing 16 senior positions at grade 3 or above, cutting 119 employees at overseas subsidiaries, returning 50% of the president's salary for 2018 and 2019, returning 10% of salaries for grade 3 or above in 2018, and reducing executive secretaries and drivers.

Through intensive austerity management, KNOC reduced borrowings by $180 million, keeping debt levels to an increase of only $30 million compared to the previous year.

However, due to after-tax net losses and derivative losses, capital decreased by $170 million, and the debt ratio rose by 733 percentage points from the previous period to 3,021%.

Following the sale contract signed in January for the North Sea Tolmount asset, KNOC plans to continue efforts to rationalize non-core assets and attract financial investors.

A KNOC official said, "If self-help efforts such as asset sales succeed, the debt ratio will be significantly reduced by the end of this year. However, if the decline in oil prices due to the COVID-19 pandemic prolongs, the possibility of fluctuations cannot be ruled out."

This content was produced with the assistance of AI translation services.