SEOUL-- South Korea will carry out a major reshuffle of overseas resource exploration projects pushed by state-run companies to cut their ballooning debt and to reflect the latest market trend, the energy ministry said Wednesday.
The Ministry of Trade, Industry and Energy announced the plan in a meeting of a task force team composed of civilian experts, which will look into the feasibility of the resource development projects currently under way.
The latest move comes as the state utility corporations have been reporting huge losses from overseas projects that were aggressively pushed under the former Lee Myung-bak administration (2008-2013) amid higher oil prices. But the recent crude price fall, and U.S. shale oil output and natural gas boom have hurt such investments.
State energy firms have invested 43.4 trillion won since 2008, but only 38 percent have been recovered as of June. The amount of the confirmed loss reached 13.6 trillion won, accounting for about 30 percent of total investments, the ministry said.
The debt ratio at the Korea National Oil Corp. jumped from 73 percent in 2008 to 529 percent in 2016, while the Korea Resources Corp.'s capital is worth less than the par value of issued stock.
The task force team said the companies underestimated costs when taking over foreign companies and overestimated expected profits, without conducting in-depth analysis into their business prospect.
Among 82 memorandums of understanding signed since 2008, only 10 projects have been materialized, it noted, raising questions of the projects touted by the previous government.
The civilian experts will classify 81 projects pushed by three state energy firms to three categories and recommend effective ways to manage them, the ministry said.
Source: Yonhap News Agency