KOGAS, KNOC Merger Being Considered by South Korean Government

Merging Korea National Oil Corporation (KNOC) with Korea Gas Corporation (KOGAS) is one of the options South Korean government is considering to improve profitability of two entities.

According to Pulse News, the government is also looking at the option of combining overlapping businesses of the two state-run entities.

The Ministry of Trade, Industry and Energy assigned Deloitte Anjin to look into ways to rationalize the state energy enterprises. 

Multiple sources told Pulse News that of the four reform measures suggested in the report, the most viable plan to improve overseas resources development is to merge KNOC with KOGAS.

In another suggestion, KNOC would be selling its resources development unit to a private company. This plan, however, raises concerns over the possibility that the country’s overall resource development asset could end up being sold undervalued, Pulse News added. 

The report also included the plan of transferring KNOC’s resources development business to KOGAS, which will allow more lenient financing activities. This plan, however, will likely be met with opposition from minority shareholders. 

The report also suggested spinning off KNOC’s overseas resources development unit and establishing a new entity to seek private investment.