"Saving the Oil, Gas, and Minerals Corporation"... Launch of the 2nd TF

Discussion on Overseas Resource Development Restructuring Begins for 6 Months

[Asia Economy Reporter Moon Chaeseok] The Ministry of Trade, Industry and Energy announced on the 21st the official launch of the '2nd Task Force (TF) for Innovation in Overseas Resource Development.' Over the next six months, it will review the financial management and restructuring of resource public enterprises.

The Ministry held the first plenary meeting of the 2nd TF at 10:30 a.m. at the Korea Trade Insurance Corporation. Attendees included Chairman Park Jung-gu, a professor at Seoul National University of Science and Technology, 19 private members, 2 government members, and presidents (or their deputies) of Korea National Oil Corporation, Korea Gas Corporation, and Korea Mineral Resources Corporation.

Professor Park also served as chairman of the 1st TF. The 2nd TF was formed with him as chairman to maintain continuity of discussions and to enable intensive deliberations within the short six-month activity period.

Private members were appointed from academia and research (7), accounting and management (4), legal (2), labor relations (1), civic groups (3), and industry (2). Government members are Moon Dong-min, Director of Resource Industry Policy at the Ministry of Trade, Industry and Energy, and Lim Ki-geun, Director of Public Policy at the Ministry of Economy and Finance.

Source: Ministry of Trade, Industry and Energy

At this meeting, the 2nd TF received reports on the restructuring progress of the three public corporations and discussed future TF operational directions. They reviewed the implementation status and plans of the 1st innovation TF recommendations for public enterprises.

According to the Ministry, the COVID-19 pandemic, low oil prices, and investment contraction in the global energy market combined to hinder the success of public enterprise restructuring based on the 1st TF recommendations.

The financial conditions of public enterprises also worsened. Korea National Oil Corporation's debt ratio reached 3,021% last year, a significant increase from 2,287% the previous year. Korea Gas Corporation's ratio was also high at 383%. Korea Mineral Resources Corporation's debt amount rose to 2.5 trillion KRW last year, more than triple the 800 billion KRW in 2016.

Earlier, on May 12, the Ministry indicated a high-intensity restructuring of resource public enterprises through the 'Basic Plan for Resource Development.' The 2nd TF was established to this end.

Source: Ministry of Trade, Industry and Energy

The 2nd TF is composed of a plenary meeting, three subcommittees (financial verification, asset rationalization, resource ecosystem), and an operating committee. The operating committee includes the chairman, three subcommittee chairs, and secretaries.

The TF is principally set to operate for six months, with the possibility of extension within six months if necessary. It will support agenda review through commissioned research.

Going forward, the TF plans to ▲ objectively reassess major overseas resource development projects and public enterprise financial conditions ▲ review and supplement public enterprise restructuring ▲ discuss public-private resource development promotion systems.

Chairman Park stated, "South Korea is an energy-importing country that depends on overseas sources for more than 94% of its national energy resources," adding, "In the current situation where public and private resource development is greatly contracted, it is a timely moment to have various discussions to reactivate overseas resource development functions."

He continued, "Based on the policy directions of the Basic Plan for Resource Development, we will supplement and improve the 1st TF recommendations and improve the financial conditions of public enterprises," adding, "We will seek various measures to fundamentally improve the overall resource development system."

Source: Ministry of Trade, Industry and Energy

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