[Breaking News] KNOC to sell Canadian Harvest for 900 billion KRW after investing 7.7 trillion KRW

Acquired in 2009 for 'overseas resource development' purposes
KNOC pursues sale to alleviate capital impairment
Drilling facilities extracting crude oil from Harvest Operations' Bellstar field. (Provided by Korea National Oil Corporation) Korea National Oil Corporation (KNOC) is reportedly planning to sell Harvest Operations, a Canadian crude oil development company in which it invested over 7 trillion KRW, for 964.9 billion KRW. This is one of the self-rescue measures to reduce capital impairment ahead of the establishment of the Korea Energy and Resources Agency.
According to an analysis of audit materials received from KNOC by the office of Kim Jong-min, an independent member of the National Assembly's Trade, Industry, Energy, SMEs, and Startups Committee, on the 21st, KNOC plans to recover 964.9 billion KRW through the asset sale of its subsidiary, Harvest. This is interpreted as an effort to improve its financial structure prior to the merger with Korea Gas Corporation announced last September.
Criticism has been raised that the recovery scale is small compared to the amount invested. Rep. Kim stated, “After KNOC acquired Harvest in 2009 for 4.1067 trillion KRW, it has invested a total of 7.6964 trillion KRW as of this June; recovering 964.9 billion KRW means recovering only one-eighth of the total investment.” He added that since the target sale amount is calculated based on book value, the actual sale price could be even lower.
KNOC plans to pursue financial restructuring totaling 1.0711 trillion KRW from this year through 2030. The plan is to secure 964.9 billion KRW through the sale of Harvest assets and an additional 106.2 billion KRW through management efficiency.
However, KNOC is expected to have difficulty escaping capital impairment even after the asset sale. According to KNOC's financial outlook, the scale of capital impairment in 2029, when the sale is expected to be completed, is predicted to increase by 918.3 billion KRW compared to 2028, and will reach approximately 1.4 trillion KRW in 2030.
Rep. Kim said, “If the sale of Harvest's assets is delayed or falls short of the target, the burden will fall entirely on the merged corporation. To avoid passing the burden to the merged corporation, measures must be prepared regarding the actual value of the remaining assets and contingency plans in case the sale is delayed.”
Since its acquisition in 2009, Harvest has been criticized as an aging oil field where the water cut in the crude oil production process exceeds 80%. It has been pointed out as a case of wasting taxpayer money, as approximately 3.6 trillion KRW has been injected to repay debt and maintain operations since the acquisition.