[Exclusive] Korea National Oil Corporation Sells US Anchor Oil Field, Invested 1.2 Trillion Won, at a Loss

Disposal of 80% Stake in Aengkeo Oil Field... Sale Price Approximately 64 Billion KRW
Petroleum Corporation's Stake at 51%... Around 41 Billion KRW
Total Investment Exceeds 1.2 Trillion KRW... Less Than Half of Principal Recovered
Concerns of 'Undervalued Sale' Realized... "Should Be Seen as a Failed Price Negotiation"

The offshore Anchor oil field in the U.S. Gulf of Mexico, sold by Korea National Oil Corporation last July.
[Photo by Korea National Oil Corporation]

[Asia Economy Sejong=Reporter Lee Jun-hyung] It has been confirmed that Korea National Oil Corporation (KNOC) recovered only 460 billion KRW, less than 40% of its investment, through the sale of the offshore oil field in the U.S. Gulf of Mexico, which it purchased for 1.2 trillion KRW in 2008. There are concerns that the oil corporation, which fell into capital erosion, rushed to sell overseas assets and failed in price negotiations.

According to data submitted by KNOC to the office of Rep. Han Mu-kyung of the People Power Party on the 6th, 80% of the U.S. Gulf of Mexico Anchor oil field shares held by KNOC and Korea Investment Trust Management were sold in July for 47 million USD (approximately 64.1 billion KRW). The Anchor oil field is an offshore oil field in which KNOC acquired an 80% stake by investing 898 million USD (about 1.23 trillion KRW) in August 2008. The buyer was the U.S. resource development company W&T Offshore, and the sold shares consisted of 51% held by KNOC and 29% by the Korea Investment Trust Management consortium. KNOC is expected to recover around 30 million USD (approximately 41.2 billion KRW) from this sale.

Previously, in 2012, KNOC sold a 29% stake to Korea Investment Trust Management for 307.6 million USD (about 420 billion KRW). Accordingly, the total amount KNOC recovered through two rounds of share sales was 337.6 million USD (approximately 464 billion KRW), which is about 38% of the total investment.

Regarding this, KNOC stated that the price was set appropriately considering that the Anchor oil field is an aging block. A KNOC official said, "The Anchor oil field is an aging block that began production in the 1960s," adding, "Production has declined and future potential is low, so we established and implemented an exit strategy."

However, the industry evaluates that the asset was sold at a ‘fire-sale’ price due to being pressed by asset restructuring plans. It is pointed out that KNOC, in an effort to overcome the complete capital erosion state that has continued since 2020, hurriedly disposed of overseas assets, leading to a ‘hasty sale.’ KNOC had already sold the Canadian refinery NARL in 2014 at one-hundredth of the acquisition price, resulting in a loss of about 1.5 trillion KRW. Professor Kang Cheon-gu of Inha University’s Department of Energy Resources Engineering said, "(The sale of the Anchor oil field) can only be seen as a failure in price negotiations," and added, "It is hard to view this as a rational sale from the perspective of energy security."