Economic Security Is Important... But No Korean Global Energy Companies Are Visible

Top in sales by country with 30.8% in China, Korea ranks 13th with 2.3%
Average sales per Korean energy company ranks 19th out of 26 countries
"In the era of economic security, energy sector vitality must be enhanced"

Source=Federation of Korean Industries

[Asia Economy Reporter Kim Pyeonghwa] Recently, as Russia halted the operation of gas pipelines leading to Europe, the importance of the energy industry has come to the forefront. There is a growing recognition that the presence of a nation's energy companies is a crucial pillar in establishing economic security. However, domestically, there are no major global energy companies, and the existing ones are small in scale, leading to calls for support.

The Federation of Korean Industries (FKI) announced on the 20th that, based on an analysis of the '2022 Fortune Global 500,' there is a need to focus on nurturing energy sector companies domestically.

According to the FKI, among the 500 largest companies in the 2022 Fortune Global 500, there were 77 energy companies from 26 countries, making it the second-largest sector by number of companies after finance (111 companies). The share of energy companies in the total revenue of the global top 500 companies (based on 2021 revenue) was 19.4%, ranking alongside finance as the highest among 21 sectors. By country, China had the largest number of energy companies with 18. Following were the United States with 11 companies, and the United Kingdom, France, India, and Germany each with 4 companies.

Notably, China owns all of the top three Fortune Global 500 energy companies: State Grid Corporation of China (ranked 1st, $460.6 billion in revenue), China National Petroleum Corporation (2nd, $411.7 billion), and Sinopec (3rd, $401.3 billion). South Korea had three companies ranked: SK (27th, $88.1 billion), Korea Electric Power Corporation (KEPCO) (45th, $52.4 billion), and GS Caltex (75th, $30.2 billion).

Looking at the total revenue scale of energy companies by country, China recorded $2.261 trillion, accounting for 30.8% of the total. The United States was second with $1.0787 trillion (14.7%). These two leading countries in the energy sector, China and the U.S., accounted for nearly half (45.5%) of the total revenue. The third and fourth places were held by the United Kingdom (7.4%) and France (5.5%). South Korea accounted for 2.3%, ranking 13th.

Source=Federation of Korean Industries

When dividing the total revenue of energy companies by the number of companies per country, the average revenue per company among the 26 countries was $95.3 billion. Saudi Arabia showed the highest average revenue per company at $400.4 billion, achieved by a single company, Aramco. South Korea's average revenue per company was $56.9 billion, ranking 19th. The global average revenue was 1.7 times higher than South Korea's. The FKI analysis suggests that domestic energy companies need to grow in scale to benefit from economies of scale.

The resource development sector, a sub-industry within the Fortune Global 500 energy field, is more profitable than other sectors such as oil refining, utilities, energy, and pipelines, with a net profit margin of 11.1% relative to revenue. This sector includes 19 companies from 10 countries, with China (9 companies), the United Kingdom (2 companies), and Saudi Arabia (1 company) leading. There were no domestic companies in this sector.

Yoo Hwan-ik, head of the FKI Industry Division, said, “Looking at the Fortune Global 500, the energy sector is a key area competing with finance for the top spot in revenue,” adding, “At a time when countries worldwide are focusing on resource and energy security, South Korea also needs to actively promote the development of energy companies.” He emphasized, “Since the resource development sector within the energy field is particularly profitable, institutional support is urgently needed to help domestic companies leap to a global level in this area.”

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