Sept. 6 (Bloomberg) -- Korea National Oil Corp., the state-run energy company, is in initial discussions to sell its operations in Canada as part of efforts to restructure loss-making overseas units.
“We’ve only just started to talk to companies that are interested in buying the business in Canada,” Choi Hong Seok, a spokesman at the Anyang, South Korea-based company that is known as KNOC, said today by phone, without further identifying the operations.
KNOC’s assets in Canada are mainly held in Harvest Operations Corp., acquired in 2009 for C$4.1 billion ($3.9 billion), including debt. Harvest has a refinery and produces about 60,000 barrels of oil equivalent a day, according to KNOC’s website. It also owns the BlackGold oil sands lease and gets about 11,000 boe a day from the former Hunt Oil assets, which it agreed to buy for C$525 million in 2010.
KNOC posted a 904 billion won ($825.7 million) loss last fiscal year, mainly because of the failure of its overseas investments, South Korea’s National Assembly Budget Office said in a report on Aug. 27, saying it paid too much for the Harvest assets.
“Public opinion hasn’t been so great since we haven’t been doing well with our foreign units,” said Choi. KNOC has been looking at various ways to improve the profitability of its overseas assets, Choi said.
South Korea, which relies on imports for almost all its energy needs, had focused on investing in overseas assets between 2009 and 2011 amid competition with China and India to secure resources. KNOC completed a hostile takeover of Scotland’s Dana Petroleum Plc for 1.8 billion pounds ($2.8 billion) in 2010. It bought a 50 percent stake in Petro-Tech Peruana SA of Peru, now known as Savia Peru, for $450 million in February 2009 and purchased Harvest eight months later.
KNOC is involved in 26 production projects, 5 development projects and 26 exploration projects in 23 countries. Daily crude output from invested fields totaled 240,000 barrels a day as of June and secured oil reserves reach 1.35 billion barrels, according to its website.
The talks with potential partners were reported earlier by MoneyToday.
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