Expanding Our Horizons

Transcription

Annual Report 2011
Expanding
Our Horizons
2011 Annual Report | KNOC
Corporate Profile
Writing a new history in the Korean
energy industry through endless
Contents
change and challenge
Korea National Oil Corporation (KNOC) is a state-owned oil company founded in 1979 to ensure stability in
domestic oil demand and supply. The Company has been engaging in exploration and production of domestic
and overseas oil resources, oil stockpiling, improvement of oil distribution structure and oil information service,
and pioneering the future of Korea’s energy industry.
Since the declaration of the strategic goal of GREAT KNOC 3020 to achieve substantial growth in 2008, KNOC
has successfully acquired overseas oil companies including Taylor Energy of the US, Savia-Peru of Peru, Harvest
Energy Trust of Canada, Sumbe of Kazakhstan, Dana of the UK and Anadarko of the US. In addition, KNOC
is continuing the domestic continental shelves exploration as an ongoing process. Now, KNOC is close to
accomplishing the goal of 300 thousand b/d in production and 2 billon barrels in reserve by 2012.
KNOC’s Doo Sung, Korea’s only semi-submersible rig, is globally operated with a priority on improved safety
and efficiency. Under the standard of the International Association of Drilling Contractors (IADC), Doo Sung rig
achieved four consecutive accident-free years by 2011, raising KNOC’s stance in the global oil drilling industry
with top-notch safety and efficient operation performances.
02_ Corporate Profile
04_ E xpanding Our Horizons
12_ Message from the CEO
15_ Financial Highlights
16_ Executive Officers
18_ Review of Operations
- Overseas Exploration & Production
- Domestic Continental
Shelf Exploration
- Offshore Rig Operations
- Oil Stockpile
- Economic Gas Stations
- Oil Information Service
- Research & Development
36_ Sustainability Management
- Environmental Management
- Risk Management
- Ethical Management
- Innovative and Family-friendly
Management
- Social Contribution
48_ Financial Section
59_ Organization Chart
60_ Global Network
Meanwhile, KNOC launched the Economical Gas Station with the goal of stabilizing the domestic oil prices amid
high international oil prices. As of April 2012, a total of 487 Economical Gas Stations are operated nationwide,
helping Koreans improve their quality of life. Furthermore, Opinet, a comprehensive real-time gas station
information system, has garnered positive feedback from customers. This service won the Grand Prize at the
competition for the best mobile website among public corporations in 2011.
KNOC will prepare for further growth after post- GREAT KNOC 3020 strategy by focusing on securing oil reserves
through improving exploration success rate, diversifying E&P business portfolio and creating synergy effect
among overseas businesses externally. Internally, KNOC will strive to stabilize domestic oil prices and enhance
the quality of lives of Koreans to become a global state-run oil major respected by the public.
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Expanding Our HorizonS
TAKING A LEAP TOWA RD GLOBAL TOP 50
“Can-do spirit” is the essence of KNOC in leading the future of
Korea’s energy industry.
the oil industry, and received worldwide interest.
KNOC is proactively engaged in oil development, exploration, and
In 2008, KNOC’s reserve and production volume remained at
production on the global arena, and the number of on-going
around 540 million barrels and 50 thousand b/d at the time when
project reaches 218 in 24 countries as of March 2012.
the plan for growth was announced. However, thanks to the
large-scale merger and acquisition implemented in the US, Peru,
Canada and the UK, reserve and production volume rose to 1.28
billion barrels and 219 thousand b/d as of the end of 2011. Korea’s
self-sufficiency rate in the development of oil and gas also more
KNOC will continuously challenge rather than rest on our laurels.
With the mid-to-long term strategy for sustainable growth , KNOC
will take a new leap forward as one of the 50 largest global oil
companies in the world by 2017.
than doubled from 5.7% in 2008 to 13.7% in 2011. In particular, we
executed a hostile takeover of Dana of the UK for the first time as
a Korean public corporation, which was selected as the secondmost noteworthy news in 2010 by Platts, a global publication for
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Driving Global Op
KNOC is reaping tangible results in the global market by relentless
2011 in addition to the Ankor oil field acquired in 2008. The
challenges
additional acquisition led to KNOC’s full-fledged operation in the
The 15-1 block in Vietnam marked a new milestone in Korea’s
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unconventional areas of the oil and gas business.
history of oil field development by KNOC’s successful development
In the United Arab Emirates (UAE), KNOC participated in joint
utilizing it’s exclusive technology from the exploration phase,
projects in the oil and gas sector backed by the summit diplomacy
producing around 52 thousand b/d of crude oil and gas from 45
between Korea and the UAE. Consequently, KNOC participated
production wells as of the end of 2011. KNOC additionally secured
in the development of three oil fields offshore and on-land
a total of 11 million barrels of oil in the ADA block in Kazakhstan,
amounting to around 570 million barrels of Oil Initially in Place (OIIP),
the first onshore for KNOC.
and laid the foundation for entering mega oil production projects
In the oil field located in the Netherlands operated by DANA of
eration
with more than 1 billion barrels.
the UK, KNOC developed a new area of the production block
KNOC is growing into one of the global oil majors by efficiently
which will add 3,600 b/d to the total capacity and embark
managing existing production facilities, implementing successful
on commercial production in 2012. In the US, KNOC secured
Post-Merger Integration (PMI) activities with acquired subsidiaries,
23.7% stake in the shale oil production block of Anadarko in
and carrying out differentiated growth strategies for each region.
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STRENGTHENING CO
With the new “Post 3020”, a strategy prepared after the realization
Consequently, we secured an additional reserve of 46.5 million
of the GREAT KNOC 3020, KNOC will achieve organic growth
barrels. In particular, we identified an extra 11 million barrels of
through improving oil exploration success rate and diversifying
crude oil reserves in the ADA block of Kazakhstan, enhancing the
business portfolio into unconventional areas of oil and gas sector.
economic value of the block.
To this end, KNOC is devoted to setting and executing measures
In the Oil Stockpiling business, KNOC secured a total of 130.1
which can strengthen exploration capability in the overall oil
million barrels including the volume from the international joint-
development business by facilitating exchanges with overseas
stockpile business as of the end of 2011. Stockpiled asset not only
experts, establishing a team dedicated to identifying prospective
creates synergy with the E&P business, but also plays a pivotal role
oil blocks, and supporting a consultative body of experts for each
in expanding business opportunities with affiliates and external
exploration process.
partners.
In 2011, theses efforts culminated in 28 exploration success cases
Moreover, KNOC financed USD 1.0 billion through the issuance
out of a total of 57 drill holes in core prospective regions by
of international bonds in October 2011, which was selected
focusing on exploration and drilling activities.
as the best deal for Asian investment-grade bonds in 2011 by
MPETITIVENESS
publications such as Asset and Asiamoney.
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DIVERSIFYING BUSIN ESS PORTFOLIO
KNOC has been making tireless efforts to secure new business
achieved record-high revenue of KRW 112.5 billion, up by 17%
opportunities and future growth engines through various oil
over the previous year.
development projects.
The accomplishment led KNOC to conclude a Memorandum
Going beyond the boundaries of global E&P projects, KNOC also
of Understanding (MOU) on the transfer of Operations and
is pioneering new oil resources by entering unconventional oil
Maintenance (O&M) technology for stockpiling base to PVOS, an
and gas markets. In particular, the acquisition of 23.7% stake in the
oil stockpiling subsidiary of Petro Vietnam, in December 2011. The
shale oil field of Anadarko of the US in March 2011 secured an
case demonstrated KNOC’s global O&M capability for stockpiling
additional reserve of 116 million barrels, which unleashed KNOC’s
bases, and boosted the prospect of exporting KNOC’s exclusive
advancement into the unconventional oil and gas markets. Driven
technology to the global market.
by the success in the US, KNOC is spurring efforts to secure new
reserves in a number of countries including Vietnam, Mongolia,
Australia and Canada.
In the international joint-stockpiling business, KNOC traded 275.4
Moreover, we launched the Economical Gas Station to improve
the oil distribution structure of Korea. This business is helping
to stabilize the livelihood of ordinary people by creating a levelplaying field among gas station operators and cutting oil prices.
million barrels of stockpiled assets, up by 106% year on year, and
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Message from the CEO
Focusing on the major growth strategy that has started since
2008, KNOC is committed to becoming a world-class national
oil corporation that represents Korea, by enhancing global
competitiveness and efficiently responding to rapidly changing
business environment.
Dear customers and partners of KNOC,
I would like to extend my sincere appreciation for your unwavering interest in and support for
KNOC.
Seizing Greater Opportunities
In 2011, KNOC strived to secure oil reserves throughout the world under the sizable growth
strategy, setting groundwork to leapfrog into a global oil corporation.
The merger and acquisition of Altius Petroleum has led KNOC to secure additional oil and
gas acreage in Kazakhstan. Equally important is that we have succeeded in tapping into the
unconventional oil and gas development business by participating in Eagle Ford Shale of the US.
One of the key highlights for KNOC in year 2011 was, thanks to the successful G-to-G relationship
between Korea and UAE, inking deal to participate in three development fields of Abu Dhabi.
Consequently, KNOC is given rights to develop 570 million barrels of OIIP (“Oil-Initially-In-Place”)
and the opportunity to join the exploration projects in Abu Dhabi that amount to more than 1
billion BOE (“Barrels of-Oil-Equivalent”) reserves. Given its rich oil reserves, low country risk and
business-friendly market environment, Abu Dhabi’s market is extremely competitive yet attractive
to enter and this makes the deal even more meaningful for KNOC.
Domestically, KNOC has constructed the oil stockpile facilities that have the storage capacity of 1.46
million BOE in line with the ‘The 3rd Government-led Oil Stockpiling Plan.’
KNOC, Respected by the People
KNOC is driving the growth of the domestic oil industry by strengthening crude oil marketing
sector, expanding the international joint-stockpile business, and implementing the project to
build an oil hub of the Northeast Asian trading market in Korea.
Furthermore, we contributed to providing the benefits to the people and stabilizing the livelihood
of the public by launching the Economical Gas Station. We seek to play a pivotal role in improving
the domestic oil distribution chain and reining in rising domestic oil prices.
We, especially our overseas offices, have been proactive in fulfilling the social responsibility
through conducting various social contribution programs on helping the neighbors, especially
children in need. KNOC is fulfilling the role as a state-owned oil company to earn respect from the
people and be a reputable national company.
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Financial Highlights
Consolidated Summarized Financial Position (KRW in millions)
2010
2011
3,610,186
2,654,584
Non-current assets
27,957,216
23,382,129
Total assets
31,567,402
26,036,713
5,490,320
5,160,562
Non-current liabilities
15,309,637
10,710,422
Total liabilities
20,799,957
15,870,984
Total shareholders’ equity
10,767,445
10,165,729
Current assets
Current liabilities
Strengthening Core Competences by Maximizing Competitive Advantages
Since the establishment of the strategic goal to achieve sizable growth in 2008, KNOC has accomplished remarkable growth by
acquiring production assets and independent oil companies. Consequently, KNOC has become one of the global national oil
Consolidated Summarized Income Statements (KRW in millions)
2011
2010
Operations Corp. (Canada), KNOC Caspian LLP. (Kazakhstan), Savia Peru S.A.(Peru) and Ankor E&P Holdings(U.S.)
Sales
8,948,378
7,167,681
Furthermore, in order to establish a corporate culture that befits recent growth of the corporation, KNOC strives to meet the global
Gross income
1,601,399
879,205
standard in management and enhance efficiencies of the group by successfully implementing post merger integration. KNOC has
Operating income
985,045
577,546
been also making efforts to boost the technological expertise and exploration success rate for organic growth.
Net income
(152,752)
5,848
Meanwhile, we are committed to identifying new business models for sustainable growth. Participating in Eagle Ford Shale and
Total comprehensive income
(199,460)
(152,990)
companies that manages six overseas subsidiaries; Dana Petroleum plc (Scotland), Altius Petroleum Int.B.V. (Kazakhstan), Harvest
El Paso Energy gave us the opportunity to build technological expertise in the unconventional oil and gas, guiding us to navigate
Shale Gas Market.
Consolidated Summarized Cash Flows (KRW in millions)
2011
2010
Great KNOC
Cash flows from operating activities
2,421,703
5,738,405
Cash flows from investing activities
(6,392,178)
(9,398,752)
Cash flows from financing activities`
3,622,868
4,217,791
Net increase in cash and cash equivalents
(329,918)
561,764
Cash and cash equivalents at the beginning of the year
1,522,982
991,218
Cash and cash equivalents at the end of the year
1,223,064
1,552,982
8,948
985
Political uncertainties in the Middle East and European Debt Crisis prevail as KNOC pushes ahead. However, 33 years of KNOC’s
history has been nothing but confronting challenges and bringing successes. I am very much convinced that KNOC is well
prepared for volatile market conditions and coping with ever-changing business environment to create new opportunities.
In addition, under the mission of establishing national energy security and providing benefits to the people by stabilizing oil
supply, KNOC will continue to proactively respond to rapidly changing global oil and gas industry and solidify its position as
a world-class national oil corporation respected by the people. We will do our best to make KNOC one of Global Top 50 oil
companies by 2017.
In this regard, I would like to ask for your continued interest and valuable support for KNOC.
31,567
7,168
26,037
Total assets
Sales
(KRW in billions)
14
Operating income
(KRW in billions)
2010
President & CEO
578
2011
(KRW in billions)
2010
2011
2010
2011
Moon-Kyu Suh
15
Executive Officers
KNOC will make great strides in becoming a respected world-class
national oil company through realizing the dream of turning Korea
into an energy-independent nation and an energy powerhouse.
Moon-Kyu Suh
Jai-Hyun Yoo
President & CEO
Standing Auditor
Hum-Sam Kwon
Seong-Hoon Kim
Executive Vice President
for Planning &
Administration Group
Director & Senior
Eu-Gene Synn
Executive Vice
President for Europe &
Africa Group
16
Chang-Seok Jeong
for America Group
Hong-Geun Im
for Asia Group
Jae-Ik Park
for Petroleum Stockpile
Group
Robert David Elliot
HR Advisor
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Review of Operations
In 2011, KNOC achieved remarkable performances
in each business sector including the expansion of oil
reserves through successful exploration and improved
efficiency in oil block operation, advancement into the
unconventional oil and gas business, making inroads
into the UAE, one of the most flourishing markets in oil
development, reinforcement of capability to build and
operate a world-class stockpiling base, and many more.
MAKING
DREAMS BECOME
REALITY
As a result, KNOC realized sales of KRW 8.95 trillion
and operating income of KRW 985.1 billion in 2011,
posting a record performance since our foundation. Our
consolidated total assets at the end of 2011 increased
21.2% year on year to KRW31.57 trillion.
To realize the vision of becoming a respected world-class national
oil company , KNOC will strive to achieve the dream of positioning
Korea as a powerful player in the global energy industry in 2012.
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Proven Reserves
1.14
1.28
0.88
0.55
(in billions of barrels)
2008
Overseas Exploration
& Production
2009
2010
2011
Daily Production Volume
179
219
128
As of the end of December 2011, we are producing around 219,000 b/d on average
in 215 prospective overseas oil development projects in 24 countries. Total reserves
reach approximately 1.28 billion barrels of oil equivalent.
57
(in thousands of barrels)
2008
Taking a Leap towards the Global Oil Player
2011 Milestones
KNOC has been contributing in stabilizing the domestic supply
KNOC laid the foundation to engage in large-scale oil development
foundation by achieving a 412% growth in operating income in the
and demand of oil by proactively participating in overseas oil
projects in the Middle East by participating in the development of
first year after the acquisition.
development, exploration, and production projects. KNOC hold the
three blocks in the UAE through active resource diplomacy. We also
rights for development and operation of 72 blocks in and outside
acquired 23.7% stake in the development project in Eagle Ford of
Korea as of the end of 2011, thanks to our technological expertise
US-based Anadarko with the best technologies in the shale oil sector.
and competitiveness in operation. Among those projects, 20 blocks
The Eagle Ford block together with the Black Gold block of Canada
are jointly operated, where we not only hold a stake but also actively
will be the strategic beachheads to expand our presence in the
engage in operation.
unconventional oil and gas market. Moreover, the Company secured
In particular, KNOC’s aggressive M&A with overseas oil companies
additional oil and gas reserves of 269.2 million in 2011 after acquiring
aimed to achieve the government policy of quantitative and
Altius of Kazakhstan and discovering extra reserves by overseas
qualitative growth ahead of schedule provided us with an
subsidiaries.
opportunity to create synergy effect with existing production blocks
KNOC’s oil and gas production increased 39% year on year to 72
and enter the downstream sector. These performances serve as the
million barrels in 2011 backed by expanding production facilities.
platform to grow as a major global player in the industry.
In particular, Dana recorded the highest financial result since its
KNOC will continue to expand the reach of exploration and
development business by seeking new opportunities. Furthermore,
based on know-how and expertise gained in such efforts, we will
accelerate our inroads into core regions including the Middle East,
Central Asia, the Americas, Russia, Australia, Southeast Asia and West
Africa.
2009
2010
2011
Overseas E&P Projects
Norway Dana
P
Korea
Kazakhstan
P
:3 D :3 E :3
:7
:1 E :1
P
:2
:1
E
P
: 9 D : 1 E : 20
:1
P
P
:8
P
: 22 D : 2 E : 51
:4 D :1
:5
:1
Egypt Dana
P
:4 D :1 E :8
:5
Uzbekistan
UK Dana
Netherlands Dana
:1
:5
Danmark Dana
:2
China
P
: 1 D : 2 E : 23
Canada
Libya
E
: 27
:3
:2
Colombia
:1
E
:3
Morocco Dana
E
:1
Venezuela
P
:1
Senegal Dana
E
Iraq
:1
E
:5
:3
Guinea Dana
Vietnam
P
:2
:1
E
UAE
:1
:1
E
:3
Peru
:3
P
Mauritania Dana
Yemen
P
:1 D :1 E :2
E
:3
U.S.A.
:2
Indonesia
:2
P
P
:1
Nigeria
E
P
Production: 57
D
Development: 12
E
Exploration: 149
Operation: 72
Co-Operation: 23
Non-Operation: 123
:2
:2
:4 D :1 E :7
:1
:4
: 2 E : 11
: 11
Production Volume of Donghae-1 Gas Field
3,374
1,755
(in thousands of barrels)
2008
2011
Domestic Continental
Shelf Exploration
In the Donghae-1 Gas Field, KNOC is producing quality natural gas and ultra-light crude oil
called condensate with heat high enough to be utilized without additional processing, with
average production reaching to 50 million ft³ of natural gas and 1,000 barrels of crude oil.
Facilitating the Development of Domestic Continental
Shelves
2011 Milestones
The continental shelves that KNOC has been exploring in the past
KNOC has been consistently striving to explore and develop
reserves under the “1st Basic Plan on the Development of Marine
were 200 to 300 meters subsurface. In order to explore the Block 8
continental shelves in Korea since its foundation to realize the dream
Mineral Resources (2009 – 2018)” by governmemt. Moreover, KNOC
located 1,800 meters subsurface, we are planning to implement joint-
of energy self-sufficient Korea.
embarked on the exploration of gas hydrates in the deep sea area
exploration and drilling in cooperation with Woodside, an Australian
which has been garnering increasing attention worldwide.
company specialized in oil exploration in the deep seas. In October
These efforts bore fruit in July 1998 when KNOC became the 95th oil
producer in the world by developing the Donghae-1 Gas Field that
holds quality natural gas layer with 186.2 billion ft³ of recoverable
reserves. The discovery was an opportunity to promote our strong
technological expertise in the global market. The average daily
2011, we secured the exploration rights on the central and southern
parts of Block 6-1 of the continental shelf of Korea in collaboration
with private companies, paving the way to facilitate continental shelf
development by joint investments with private capital.
production in the Donghae-1 Gas Field is 50 million ft³ of natural gas
Moreover, KNOC strengthened external cooperation to accelerate
and 1,000 barrels of crude oil.
development projects. Annual meetings and workshops were held
In order to carry out the exploration&development of domestic
continental shelf in a systematic and effective manner, KNOC has
been focusing exploration on regions expected to hold oil and gas
with Japanese private companies for the development of continental
shelves in the southwestern sea, which created an environment to
restart the Joint-Development Zone (JDC) exploration project ceased
by Japan’s opposition. We also held a technical seminar with the China
National Offshore Oil Corporation to develop the West Sea Basin.
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Gross Profit in Offshore Rig Operations in 2011
22.3
KRW
billion
Rig Utilization Rate in 2011
Offshore Rig Operations
77%
52%
KNOC puts priority on achieving accident-free, safe management and high efficiency in
the offshore rig operations. Based on modernized equipment, accumulated know-how
and trained technical specialists, our Doo Sung provides differentiated services beyond
customers’ expectations.
(189 Days)
Semi-submersible Rigs in
Southeast Asia
Strengthening Global Competitiveness of
Doo Sung
2011 Milestones
We have been focusing on maximizing the charter revenue of
USD 10 million in Myanmar. In the meantime, to gain a growth
Doo Sung is Korea’s only semi-submersible rig built in 1984. It has
Doo Sung and securing future growth engines in the offshore rig
momentum in the offshore oil rig business, the Corporation established
successfully drilled a total of 107 drill holes not only in Korea but also
operations. As a result, USD 50 million in charter revenue was realized
a mid-to-long term growth roadmap which includes additional
in Alaska, China, Vietnam, Malaysia, Indonesia, and Russia.
through successful accident-free operation thanks to technological
performance improvement, and an advanced risk management which
expertise in Sakhalin, Russia, a market with unfavorable operation
meets stricter offshore drilling regulations and systematic crew training
conditions. In addition, zero-breakdown time was attained for the
programs.
The Rig also gained certifications of ISM, ISO 9001 in 1988 and ISPS
in 2004 by establishing safety management system that meets the
global standard, and proactively responding to the safety demand of
customers. In particular, Doo Sung achieved accident-free operation
for four consecutive years under the IADC standard in December
(281 Days)
Doo Sung
first time since the operation of Doo Sung, which in turn impressed
Gazflot of Russia, the holder of operation license, to send a letter of
gratitude.
2011. Its capability in maintaining occupational safety and excellence
In line with our efforts to increase charter revenue, KNOC
in operation is widely recognized in the global oil drilling market.
improved the performance of Doo Sung during the idling time
in between different projects in Russia and carried out aggressive
marketing activities. Thus, we were able to secure a project of
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Revenue from International Joint Stockpiling Projects
112.5
101.1
98.9
65.7
(KRW in billions)
2008
2009
2010
Opened in 2000
Aboveground Tank: 1.1 MMB
Opened in 1981
Underground Tank: 3 MMB
GURI
Opened in 1997
Aboveground Tank: 2.5 MMB
Oil Stockpile
DONGHAE
YONGIN
Opened in 1989
Underground & Aboveground
Tank: 6.2 MMB
PYEONGTAEK
Opened in 2005
Aboveground tank: 11 MMB
(Crude Oil), 3.6 MMB (Product)
As of the end of December 2011, KNOC holds stockpiling facility with a total capacity of
146 million barrels and reserve oil of 130 million barrels including the amount from the
international joint-stockpile business. We are planning to implement the 3rd Government
Plan on Oil Stockpiling to secure a total of 141 million barrels of reserve oil by 2013.
SEOSAN
Opened in 1981
Tank : 19.3 MMB
ULSAN
Opened in 1999
Aboveground tank: 2.1 MMB
GOKSEONG
GEOJE
YEOSU
Opened in 1998
Underground &
Aboveground Tank :
49.8 MMB
Opened in 1985
Tank: 47.5 MMB
Crude Oil Tank
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Improving Competitiveness in the Oil Stockpiling
2011 Milestones
Since the establishment in 1979, KNOC has been engaging in the
oil stockpile business to promote energy security of Korea. As of the
end of December 2011, we hold 130 million barrels of reserve oil
including the amount from the international joint-stockpile business
in stockpiling facilities equipped with a total capacity of 146 million
barrels in nine regions including Ulsan, Geoje and Yeosu. In order to
balance domestic supply and demand and reinforce the capability to
respond to oil shocks, we plan to execute the 3rd Government Plan on
Oil Stockpiling with a goal of reserving 141 million barrels by 2013.
In May 2011, the capacity of oil reserves supply was expanded
following the establishment of a system to adopt overseas-produced
oil in case of emergency situations. We also contributed to balancing
domestic supply and demand and stabilizing oil price by supplying
a total of 3.47 million barrels of oil reserves under consultation with
the government and oil refining companies. This was in line with the
global joint-response to the interruption in oil supply coordinated by
the International Energy Agency given the uncertainty surrounding
Libya.
The oil stockpile business contributes to stabilizing supply and demand
as well as oil prices by providing a timely supply of reserve oil and
stockpiling facility during uncertain times. In the past, the business has
been static with the top priority of promoting oil security. However, we
currently manage reserved assets within the range that does not deviate
from the original purpose of the business. KNOC has made the transition
into dynamic stockpiling that focuses on oil security and economic
feasibility at the same time, fortifying the competitiveness of the business.
The project to build an oil hub of Northeast Asia in Yeosu and
Ulsan by establishing a commercial oil storage facility has been
continuously implemented since 2008. The tank terminal in Yeosu
will be completed at the end of 2012, ready for commercial operation
in 2013. In Ulsan, we signed the agreement on the cooperation for
deregulation to lay the internal and external foundation for success.
2011
Product Tank
LPG Tank
million barrels, up 106% over the previous year, thanks to the expansion
of trading volume, establishment of responsible management team,
and proactive marketing activities for crude oil produced from blocks
of KNOC’s overseas subsidiaries. We posted a record-revenue of USD
101.6 million, up 17% year on year in the international joint-stockpile
business as well.
KNOC will continue to strive to achieve the government’s reserve goal
in a timely and efficient manner by effectively managing reserve assets
through trading and international joint-stockpile business.
Meanwhile, we reaped fruits in the management of stockpiled oil.
The size of trading that utilizes reserved assets in 2011 reached 27.54
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The Number of Economical Gas Stations
487
as of the end of April, 2012
Economical Gas Stations
The Economical Gas Station business launched in December 2011 expanded to record a total
of 487 gas stations as of the end of April 2012, only four months since its beginning. KNOC
will consistently facilitate the business to stabilize the livelihood of the general public.
Successfully Adopting and Operating the
Economical Gas Stations
Contributing to Oil Price Stability and Inflation
Control in Korea
The Economical Gas Station was launched to stabilize oil prices by
The Economical Gas Station has been contributing in triggering fair
we will continue to strive to improve the domestic oil distribution
improving the domestic distribution structure.
competition in the domestic oil market which was once dominated
structure and stabilize oil prices by creating favorable conditions for
by four major oil refiners. The price cut in the Economical Gas Station
fair competition through efficient management and supports for
curbed the price hike in nearby gas stations of different brands,
Economical Gas Station.
With the establishment of a team dedicated to oil distribution in October
2011, KNOC has accelerated the business by encouraging participation to
Korean oil refiners, securing infrastructure including storage facilities, and
adopting support measures for participants and rational pricing method.
The Economical Gas Station supplies affordable products that
The first Economical Gas Station was opened in December 2011.
are secured through joint-procurement of oil and the remaining
To promote more participants, we have proactively engaged in PR
activities such as holding seminars in five major cities of Korea in January
2012. At the same time, credit cards with services affiliated with the
Economical Gas Station were issued and funds were subsidized to
participants. We also promoted the brand to the general public for a
30
directly benefiting consumers.
capacity of stockpiling facilities of KNOC. It has also induced gas
station operators to move away from competition oriented toward
additional services. As a result, the Economical Gas Station has come
up with the new paradigm of cost-reducing gas stations equipped
with price competitiveness.
successful outcome of the business. Consequently, as of the end of April
KNOC will consistently implement various measures to expand the
2012, the number of Economical Gas Stations nationwide is 487 in total.
penetration of Economical Gas Station in Korea. Simultaneously,
31
The Number of Petronet Subscribers
180
140
(in thousands persons)
2008
2011
Oil Information Service
KNOC collects, analyzes, and evaluates a variety of oil information in the domestic and overseas
market that contributes to policymaking and decision-making process of the government, domestic
business, and academia. Opinet, the first comprehensive gas station information system in the world, is
playing a key role in deriving fair market competition and stabilizing the general public’s livelihood.
Providing Rapid and Accurate Oil Information
2011 Milestones
KNOC collects, analyzes and evaluates a variety of oil information covering
KNOC puts priority on improving the quality of oil information and
Meanwhile, KNOC has been training experts by region and sector
not only rapidly-changing global market conditions but also domestic
strengthening the operation of our information service to raise the
to enhance the accuracy of predicting trends in the oil market and
supply and demand ranging from crude oil import, product trade and
level of customer satisfaction.
strengthen the study on key information services. We are also striving
private oil inventory. The information is established as a detailed database
to provide accurate information swiftly to all areas of the industry, greatly
contributing to reinforcing the competency of the Korean oil industry.
The mobile Opinet application for smart phones was introduced in
May 2010. We have been consistently enhancing its function and
reflecting user ideas to provide various contents customized to
Petronet (www.petronet.co.kr), the only web-based multimedia oil
the mobile environment. For instance, the application helps users
information network in Korea, holds around 180 thousand subscribers as
make decision where to fuel by providing real-time oil prices of
of the end of December 2011. Opinet (www.opinet.co.kr) introduced in
gas stations around them wherever they are. The effort to improve
2008 is the world’s first comprehensive gas station information system
user access to information led KNOC to win the Grand Prize in the
that offers quality information on oil prices in a transparent manner to the
competition for the best mobile website among public corporations
buyers. It has been leading the way in promoting fair competition in the
in 2011. In 2011, 100 thousand people used the application on a
domestic oil market. In 2010, the Fair Trade Commission released a study
daily basis. The cumulative number of downloads surpassed 300
that Opinet substantially contributed to stabilizing oil product prices in
thousand, proved the great popularity of the service.
to transition into an advanced organization focused on knowledge,
information, and research and development (R&D) with competency in
both business management and technological expertise. In addition, in
order to develop into a global think-tank specialized in the oil industry,
we have been conducting studies on strategies that will help us enter
new businesses and analyze the oil market. Such efforts drive us to
fulfill the role of an opinion leader in the domestic oil market.
Korea as the price of gas per liter fell by around KRW 16.4 since its launch.
32
33
Investments in R&D
18.0
16.5
12.2
8.3
(KRW in billions)
2008
2009
2010
2011
Research & Development
KNOC has established an organized R&D system to secure oil development technology and
exclusive technological expertise which meets the global standard. Meanwhile, our efforts
to nurture our internal experts have been accelerated by co-working with the specialists in
acquired overseas subsidiaries and the KNOC Global Technology & Research Center (GTRC).
Focusing on Enhancing Technological Capacity
2011 Milestones
Differentiated technology is a critical competitive edge that
KNOC has diagnosed the level of our technology for four E&P areas
Moreover, KNOC has been proactively utilizing the KNOC GTRC to carry
determines the future of a company. KNOC has been establishing
to develop exclusive technological expertise. At the same time,
out technical review on large-scale projects implemented in the UAE,
and implementing systematic and comprehensive measures
we identified areas where the six strategic technologies should be
Kazakhstan and Peru. In order to nurture high-caliber manpower in
to secure oil development technology which meets the global
complemented considering the recent trend in the oil industry and
E&P, we held the 1st Global KNOC Technical Symposium to encourage
standard.
our strategic goal. Selective investments in R&D have been made in
exchanges among technicians among KNOC HQ, overseas offices,
such areas. In 2011, KNOC has conducted 20 government studies
and the subsidiary companies. This served as an opportunity to share
and 6 internal studies including those related to the unconventional
technological expertise.
In 2010, we scouted an executive from a major overseas oil company
to lay the foundation in securing global technology. In addition,
we have been carrying out concrete actions to foster experts and
develop exclusive technology based on the strategic technology
oil and gas industry. In addition, we applied for patents on 13
technologies, with one registered technology.
roadmap.
Furthermore, we are creating synergy effect in the area of E&P
technology by tapping into the KNOC GTRC network built in Calgary,
Canada in 2010, and the global technical specialists of overseas
subsidiaries including Dana, HOC and Ankor.
34
35
As a state-owned oil company responsible for national
energy security, KNOC is implementing various
activities for sustainable growth ranging from the
introduction of advanced ethical management system
meeting the global standard to the fulfillment of
corporate social responsibility through company-wide
social contribution activities, co-prosperity with business
partners, environment-friendly management and efforts
to achieve the national vision of low carbon green
growth.
Contributing to
People and
Society
KNOC will continuously focus on preparing for
a sustainable future by building consensus among
executives and employees on corporate social
responsibility, as well as sharing and implementing our
vision and strategies with all stakeholders.
KNOC is establishing and implementing measures to be recognized
and trusted by the public and stakeholders to develop into a global
state-owned oil company, pioneering a sustainable future.
36
37
Sustainability Management
Environmental
Management
KNOC will realize the dream of building a green and prosperous energy
company. We pursue the beauty of life and happiness through business
activities that harmonize the people and the environment. Our commitment
to eco-friendly management will position us as a global state-run oil major
beloved and respected by the general public.
KNOC has adopted and managed the quality and environmental
Cutting-edge antipollution facilities tailored to the type of oil
management system (ISO 9001 and ISO 14001) for all sites, through
storage were also installed. In particular, KNOC has been focusing on
which we are focused on creating an accident-free working
proactive actions to operate eco-friendly stockpiles such as leakage
environment and preserving the natural environment of the local
prevention through regular inspections on negative environmental
community. Our stockpiling sites are certified with KOSHA 18001
factors by designating environment Key-man at each site.
and the offshore rig operation business has established and been
managing the ISO 9001 and ISM/ ISPS Code for ship safety and
security.
In addition, an efficient Health, Safety and Environment (HSE)
management system which meets the level of global oil majors was
introduced, contributing in creating safe environments for E&P. For
instance, on the Long Doi platform of Block 11-2 in Vietnam, we have
been complying with a range of safety management regulations
and rules, and operating the safety management system. As a result,
we achieved accident-free operation for four consecutive years in
November 2011.
Consequently, KNOC realized 11 consecutive accident-free years in
nine stockpiling bases in 2011. Six bases acquired the highest level
of safety management (P), from the Process Safety Management
system of the Ministry of Labor.
In the meantime, we are engaged in R&D for low carbon green
growth to realize the national vision of Korea and to identify new
growth engines. With the strategic tasks including the pursuit of
green growth R&D projects, continuous improvement of the climate
change response system and target management of greenhouse
gas in the public sector, we are studying carbon capture and storage
technology, developing gas-to-liquids technology, building internal
For the safe management of stockpiling sites, we are rigorously
and external infrastructure for climate change response, striving to
managing pollutants that could degrade water, atmosphere and
mitigate greenhouse gas, saving energy, raising energy efficiency and
soil emitted from the design phase to the storage phase. Meticulous
researching the areas of wind and photovoltaic power generation.
preparation is carried out for the probability of marine pollution.
38
39
Risk
Management
Utilizing the Enterprise Risk Management (ERM) system,
KNOC has established a permanent monitoring system
on key risk factors in terms of finance, strategy and
operation to take preemptive measures against risks.
We have measured the value-at-risk and earning-at-risk depending on the fluctuation of risk factors
including exchange rate, interest rate and oil price and compared the measurement to predetermined
limit for monthly base. If the financial risk index exceeds the predetermined limit, we implement a 100%
hedge against the excess in principle. We observe the volatility of risk factors through the ERM system
and then measure the financial risk index and implement daily monitoring upon the detection of
unusual trends. As such, we are striving to manage risk in a timely manner. In addition, KNOC has been
carrying out the debt management plan due to the rise of debt to equity ratio after project expansions.
The asset securitization project has also been implemented to enhance the financial structure and
secure liquidity. Furthermore, the management of liquidity risk has been fortified through diverse
financial techniques, including the maintenance of a credit line and the global MTN (Medium Term
Note) program.
In terms of strategic risk management, we regularly monitor and manage key performance indices
including output, reserve, revenue and operating income against our target, estimated annual
performance and risk-adjusted performance measurement. This is to promptly establish and implement
countermeasures upon the detection of risk such as failure to attain the annual target.
In terms of operation risk management, we register key HSE indices including casualty, lost time
incident frequency rate, oil spill, fire and residual oil to the system. These indices are monitored and
managed regularly to prevent risks.
40
41
Ethical
Management
KNOC pursues ethical management meeting global
standards. We have been implementing genuine ethical
management including the operation of advanced
ethical management system, fulfillment of social
responsibilities, and expansion of ethical management
culture backed by strong commitment of the CEO.
KNOC strives to create a healthy corporate culture that meets the global standard and fulfills social
responsibility to the nation, society, and the public through fair and transparent business management.
We have set in place institutions required for advanced ethical management that befits the
characteristics of a public corporation including the establishment of the ethics charter and code of
conduct, adoption of a compliance monitoring system, and development of the e-audit system. Our
efforts have resulted in the creation of a transparent corporate culture where every executive and
employee participates in ethical management.
The Corporation has also been striving to strengthen the sense of ethics of executives and employees
by including the provision that mandates the completion of an anti-corruption and transparency oath
and training on transparency in the code of conduct.
In addition, internal and external communication have been reinforced through the adoption of the
Great Way, a direct communication channel with the CEO in 2009, and the transparency-oriented
ombudsman system in 2011. We have also made endeavors to prevent illegal practices in human
resources management (HRM) by adopting the HRM complaint system in 2011.
In particular, our effort to strengthen ethical management has been extended to overseas subsidiaries
by checking the practices of and training on ethical management in their sites.
42
43
Innovative and
Family-friendly
Management
KNOC’s corporate structure is developing through
continuous innovation. Moreover, our family-friendly
corporate culture contributes to the improvement of
quality of all employees’ lives.
In 2010, we became the first public corporation to adopt the incentive system which can be found in
private businesses to all employees. Other innovative activities include the introduction of managerial
accounting system along with the IFRS, establishment of ERM system and facilitation of knowledgebased management system. In particular, we held the Global Steering Committee to integrate the
management systems and create synergy effect among the headquarters and overseas subsidiaries
for the first time as a public corporation in 2011. The Global Mobility was developed to encourage the
exchange of technical specialists between the headquarters and subsidiaries.
Consequently, Dana achieved 31% and 412% increases in production volume and operating income
respectively in only a year after the acquisition. Net income also turned around.
KNOC also operates the e-HRD system to systematically train talents in different areas of business. The
transparent and fair HRM focused on performance and capability has also been consistently enhancing
the capacity of our entire workforce.
In addition, we are striving to establish an advanced corporate culture which puts importance on
both workplace and family with the awareness that family-friendly management is essential for the
development of a company.
The family-friendly programs of the Corporation include flexible work system, in-house childcare
facilities, “Family Day” twice a week, and financial supports for childbirth and child rearing expenses,
which all highly contributes to improving the quality of lives of all employees and their families.
44
45
Social
Contribution
KNOC believes that the culture of sharing and coexistence
will lead us to a more prosperous and healthier society.
Therefore, we have been carrying out various Corporate
Social Responsibility (CSR) activities, including the
provision of support to the underprivileged, contribution
to the local community and offering academic and
cultural support. These activities are expanded in a
phased-out manner to include overseas markets.
We have been engaging in enterprise-wide social contribution activities focused on sharing and building a
co-prosperous society.
In 2011, we established and implemented the following major tasks: creating new private sector jobs related
to our business, realizing a fair society, spreading the culture of shared growth, pursuing cooperative projects,
and expanding enterprise-wide social volunteering activities.
The Corporation contributed to the employment of around 46 thousand people through continuous
outsourcing, partnership with private companies and strategic investment projects. We have also substantially
expanded procurement from companies headed by women and social enterprises to achieve a fair society,
co-existence and co-prosperity. Moreover, our fair and transparent bidding system and performance-sharing
system provided more business opportunities for small-to-medium sized enterprises (SMEs).
Our social volunteering activities include the Sunshine project to support heating fee low-income
households and lunch fee to children. The Happy Together project encourages headquarters and branch
offices employees to carry out joint social contribution activities. The KNOC Family project helps members
of multicultural families visit their home country and is focused on social contribution overseas. The Hopeful
Energy project is to provide scholarship and sponsor culture and art events.
In particular, KNOC is operating two different organizations for social contribution to facilitate our activities on
the global stage. We collaborated with 13 overseas offices and local social contribution foundations including
the Savia Peru Association. In line with these activities, we sent medicine and supported medical assistance
to lend a helping hand to the rehabilitation efforts after the flood in Vietnam. Our support also included the
construction of elementary schools in Peru and sports activities for the youth in Europe. As such, our activities
have been customized to different characteristics of diverse regions.
46
47
Overview
Management’s
Discussion &
Analysis
KNOC was established in March 1979 to contribute to the development of the national economy by stably supplying
oil and conducting an integrated and systematic energy policy.
KNOC’s major business areas include overseas exploration and production, domestic continental shelf exploration,
construction and operation of oil stockpiling bases, offshore rig operation, research and development, and oil
information services. With the “Great KNOC 3020” strategy mapped out in 2008, KNOC has conducted aggressive M&A
activities around the world. Consequently, the Corporation has succeeded in acquiring SAVIA-Peru, Harvest Energy Trust
in Canada and Sumbe in Kazakhstan in a row during 2009 and Dana Petroleum in the UK in 2010, which allowed us to
join the ranks of the world-class national oil corporations.
FINANCIAL
SECTION
These successful M&As hold significant meaning for KNOC in that we secured huge oil reserves and production
capacity by successfully acquiring the above companies against stiff competition with national oil corporations
of major emerging countries such as China and India. The success paved the way for our advance in the overseas
exploration and production business.
49_ Management’s Discussion & Analysis
KNOC has 10 domestic and 14 overseas branches and offices as of the end of 2011. Participating in 215 promising
overseas projects in 24 countries, KNOC produced 219 thousand b/d on average and secured reserves of 1.28 billion
barrels of oil equivalent.
52_ Independent Auditors’ Report
53_ Consolidated Statements of Financial Position
55_ Consolidated Statements of Comprehensive Income
Financial Statement Standards and Important Accounting Policies
56_ Consolidated Statements of Changes in Equity
KNOC has adopted K-IFRS in preparation for its consolidated financial statements for the period beginning January 1,
2011. Therefore, financial figures in this report were prepared on the basis of consolidated financial statements of KNOC
and its subsidiaries.
57_ Consolidated Statements of Cash Flows
The Corporation’s consolidated subsidiaries as of December 31, 2011 and 2010 are as follows:
Subsidiary Name
Harvest Operations Corporation and its subsidiaries 1)
2)
Major Business Activity
Country
Ownership (%)
E&P
Canada
100
E&P
United Kingdom
100
KNOC Kaz B.V.
Holding company
Netherlands
100
KNOC White Hill B.V.
Holding company
Netherlands
85
E&P
Kazakhstan
85
Holding company
Canada
95
Dana Petroleum plc and its subsidiaries
KNOC Caspian LLP.
KNOC Black Hill Ltd. 3)
Altius Holdings Inc. 3)
E&P
Kazakhstan
95
ANKOR E&P Holdings Corporation
E&P
United States
100
Korea Captain Company Limited
E&P
United Kingdom
100
KNOC Eagle Ford Corporation 4)
E&P
United States
100
KNOC Sumatra Ltd.
E&P
Indonesia
100
KNOC NE MONE
E&P
Indonesia
100
KNOC NE MTWO
E&P
Indonesia
100
KNOC Yemen Ltd.
E&P
Yemen
60
1) KNOC Canada Ltd., which is a wholly-owned subsidiary of the Company, acquired 100% ownership interest in Harvest Energy Trust located in Canada in
December 2009. On May 1, 2010, KNOC Canada and Harvest Energy Trust were merged into one entity named Harvest Operations Corp. (Harvest).
2) In October 2010, the Corporation acquired 100% ownership interest in Dana Petroleum plc (Dana) which has exploratory, developing and producing oil
wells in the United Kingdom, the Netherlands, Norway, Egypt and other countries.
3) In March 2011, the Corporation acquired 95% of ownership interest in Altius Holdings Inc. located in Kazakhstan through KNOC Black Hill Ltd.
4) In March 2011, the Corporation established KNOC Eagle Ford Corporation (Eagle Ford) as a wholly-owned subsidiary, and Eagle Ford acquired some
interests in upstream and midstream businesses of Anadarko E&P Company LP located in the United States.
48
49
Management’s
Discussion &
Analysis
Results of Operations
Consolidated sales of KNOC in 2011 recorded KRW 8.95 trillion, up 24.8% or KRW 1.78 trillion over the previous year,
driven by the reinforced E&P technological capabilities, improved operational stability in production fields, active PMI
(Post Merger Integration) activities for acquired overseas assets, and efficient use of stockpile bases.
Cost of sales showed a 16.8% increase year on year to KRW 7.35 trillion due to the rise of oil sales led by acquiring
overseas oil production assets and companies. Consequently, our gross profit rose by 82.1% over the previous year to
KRW 1.60 trillion in 2011. Sales and administrative expenses also rose by 62.9% year on year mainly due to the increases
in personnel expenditure, sales promotion costs and amortization on tangible assets.
Our consolidated operating profit in 2011 was KRW 985.1 billion, up 70.6% or KRW 407.5 billion compared to the
previous year. Operating margin increased to 11.0% in 2011 from 8.1% in 2010.
Total sales of KNOC is broken down into E&P (exploration, development and selling of domestic and overseas oil
resources), stockpiling (trading of crude oil and oil products, lease or selling of stored assets, management of oil
stockpiling facilities), financing (financing for corporations engaged in energy and resources related businesses), rig
operation (drill ship chartering) and other businesses. The respective shares of consolidated sales by business in 2011
were 96.8% for E&P, 1.6% for oil stockpiling, 0.6% for rig operation and 1.0% for others. More details are as follows.
Sales in oil exploration and production increased 25.1% over the previous year to KRW 8.66 trillion in 2011, which was
attributable to the expansion of oil and gas production and the improvement of operational stability of production
fields. Our total oil and gas production volume increased 39% compared to the previous year’s 52 million barrels
to 72 million barrels in 2011. KNOC has been proactive in the improvement of management activities in recentlyacquired overseas subsidiaries. As a result, Dana Petroleum showed increases of 31% and 412% over the previous year
in production volume and operating profit in 2011 respectively. Net profit also turned around. These performances
verified our advanced PMI capability.
Oil stockpiling business also achieved KRW 140.7 billion in sales, an increase of 11.7% compared to the previous year,
driven by the expansion of stored oil supply and trading capacities and vigorous marketing activities for overseasproduced crude oil. Meanwhile, sales in rig operations recorded KRW 55.3 billion, a decrease of 32.8% year on year,
mainly due to shortened operation days for performance upgrade.
2011
2010
Sales
8,948,378
7,167,681
Cost of sales
7,346,979
6,288,476
82.1%
87.7%
1,601,399
879,205
17.9%
12.3%
985,045
577,546
(KRW in millions)
(Ratio of sales cost)
Gross profit
(Gross profit margin)
Operating profit
(Operating profit margin)
Net profit
(Net profit margin)
(KRW in millions)
Exploration & Production
Oil Stockpile
8.1%
(152,752)
5,848
(1.7%)
0.1%
2011
2010
8,660,906
6,922,840
140,652
125,943
4,059
4,495
Rig Operation
55,291
82,290
Others
87,470
32,113
8,948,378
7,167,681
Financing
Total Sales
50
11.0%
Management’s
Discussion &
Analysis
Financial Status
As of the end of 2011, KNOC’s consolidated total assets recorded KRW 31.57 trillion, an increase of 21.2% over a year earlier,
which was mainly attributable to the increase of non-current assets. The acquisitions of Eagle Ford shares of US-based
Anadarko and Kazakhstani Altius affected to the increase of 19.6%, or KRW4.58 trillion, in non-current assets in 2011.
Capital stock rose by 10.3% year on year to KRW 8.97 trillion driven by the Korean government’s additional investments
in the oil stockpile and E&P projects. Total shareholders’ equity was KRW 10.77 trillion and shareholders’ equity to total
assets reached 34.1%. Debt to equity was 193.2% at the end of 2011.
(KRW in millions)
2011
2010
Current assets
3,610,186
2,654,584
Non-current assets
27,957,216
23,382,129
Total assets
31,567,402
26,036,713
Current liabilities
5,490,320
5,160,562
Non-current liabilities
15,309,637
10,710,422
Total liabilities
20,799,957
15,870,984
Capital stock
8,965,196
8,130,196
Capital surplus
1,106,034
1,281,489
632,286
695,087
Other components of equity
Non-controlling interests
63,929
58,957
Total shareholders’ equity
10,767,445
10,165,729
51
As of December 31, 2011, 2010, and January 1, 2010
Independent
Auditors’Report
Consolidated Statements of Financial Position
Korea National Oil Corporation and its subsidiaries
To the Board of Directors and Owner
Korea National Oil Corporation
(Korean won in millions and US dollars in thousands)
Korean won
We have audited the accompanying consolidated financial statements of Korea National Oil Corporation (the
“Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated statements
of financial position as of December 31, 2011 and 2010, and the consolidated statements of comprehensive loss,
consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended,
and the opening consolidated statement of financial position as of January 1, 2010, all expressed in Korea won. These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements
of a subsidiary incorporated in Canada, Harvest Operations Corp., of which statements reflect total assets constituting
approximately 20% as of December 31, 2010, and revenue constituting approximately 61% for the year then ended
of the related consolidated totals (before elimination of intragroup balances and transactions among consolidated
entities). Those financial statements were audited by other auditors whose audit report has been furnished to us, and
our report, insofar as it relates to the amounts included for the subsidiary, is based solely on the audit report of the
other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits and the report of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred
to above expressed in Korean won present fairly, in all material respects, the financial position of Korea National Oil
Corporation and its subsidiaries as of December 31, 2011, December 31, 2010, and January 1, 2010, and the results of its
financial performance, and its cash flows for the years ended December 31, 2011 and 2010 in accordance with Korea
International Financial Reporting Standards (K-IFRS).
US dollars
December
31,2011
December
31,2010
January
1,2010
December
31,2011
December
31,2010
January
1,2010
1,223,064 \
1,552,982 \
991,218
147,539
36,502
350,834
127,928
32,050
300,475
1,501,090
829,287
739,175
1,301,561
728,148
633,072
543,120
161,224
184,980
470,927
141,561
158,428
148
5,905
9,830
128
5,185
8,419
Assets
Current assets:
Cash and cash equivalents
\
Current financial assets
Trade and other receivables
Inventories
Current income tax assets
Current non-financial assets
$
1,060,491
$
1,363,581
$
848,936
195,225
68,683
63,051
169,275
60,307
54,000
3,610,186
2,654,584
2,339,089
3,130,310
2,330,832
2,003,330
511,682
517,530
472,363
443,668
454,412
404,559
81,504
64,054
22,366
70,670
56,242
19,156
Non-current assets:
Non-current financial assets
Long-term trade and other receivables
Property, plant and equipment
16,161,155
14,116,419
9,825,548
14,012,967
12,394,784
8,415,166
Goodwill
1,383,872
1,400,146
448,273
1,199,924
1,229,384
383,927
Intangible assets other than goodwill
5,289,899
3,278,843
1,461,393
4,586,750
2,878,956
1,251,622
993,735
922,823
721,406
861,645
810,276
617,853
Investments in associates and joint
ventures
Deferred tax assets
Non-current non-financial assets
Total assets
\
208,386
72,528
37,342
180,686
63,683
31,982
3,326,984
3,009,785
2,656,714
2,884,751
2,642,712
2,275,363
27,957,216
23,382,128
15,645,405
31,567,402 \
26,036,713 \
17,984,494
24,241,061
$
27,371,371
20,530,449
$
22,861,281
13,399,628
$
15,402,958
February 29, 2012
This audit report is effective as of February 29, 2012, the independent auditors’ report date. Accordingly, certain material
subsequent events or circumstances may have occurred during the period from the auditors’ report date to the time
this audit report is used. Such events and circumstances could significantly affect the accompanying consolidated
financial statements and may result in modifications to this report.
52
53
As of December 31, 2011, 2010, and January 1, 2010
Consolidated Statements of Financial Position
Consolidated Statements of Comprehensive Income
Korean won
December
31,2011
December
31,2010
January
1,2010
December
31,2011
Korean won
December
31,2010
January
1,2010
Current liabilities:
$
1,817,083
$
879,205
1,445,163
760,387
191,511
25,547
172,827
22,094
Selling and administrative expenses
(464,002)
(284,924)
(418,733)
(246,419)
Other operating expenses
(148,801)
(94,672)
(134,283)
(81,878)
Other profit (loss)
(195,062)
52,391
(176,031)
45,311
985,045
577,546
888,943
499,495
Current financial liabilities
703,963
258,292
226,763
610,390
226,790
194,213
Current income tax liabilities
227,917
122,556
19,512
197,622
107,609
16,711
75,121
71,750
60,288
65,134
18,953
7,644
243,234
214,384
163,289
210,903
232,286
183,840
5,490,320
5,160,562
2,574,463
4,760,530
4,531,181
2,204,919
510,275
657,389
167,631
218,322
570,007
147,187
186,984
Finance costs
Non-current provisions
2,322,882
2,040,033
1,109,571
2,014,118
1,791,231
950,300
Deferred tax liabilities
2,341,328
1,912,523
297,131
2,030,112
1,679,272
254,480
32,490
23,276
19,320
28,171
20,437
16,547
Non-current liabilities:
9,955,549
6,566,960
4,860,190
8,632,227
5,766,055
4,162,547
15,309,637
10,710,422
6,504,534
13,274,635
9,404,182
5,570,858
20,799,957
15,870,984
9,078,997
18,035,165
13,935,363
7,775,777
Equity attributable to the owner of the
parent:
Operating profit
257,921
131,270
232,758
113,530
(711,312)
(503,061)
(641,914)
(435,076)
Share of loss of associates and joint ventures
(31,890)
(43,517)
(28,779)
(37,636)
Profit before income tax
499,765
162,238
451,008
140,313
(652,517)
(156,389)
(588,857)
(135,255)
Income tax expense
Profit (loss) for the year
8,965,196
8,130,196
6,649,417
8,418,807
7,658,186
6,376,644
Retained earnings
1,106,034
1,281,489
1,354,276
945,271
1,102,429
1,159,880
632,286
695,087
838,581
(83,305)
113,537
36,509
10,703,516
10,106,771
8,842,274
9,280,773
8,874,152
7,573,033
Total equity
\
63,929
58,957
63,223
55,433
51,766
54,148
10,767,444
10,165,728
8,905,497
9,336,206
8,925,918
7,627,181
31,567,402 \
26,036,713 \
17,984,494
$
27,371,371
$
22,861,281
$
15,402,958
\
(152,752) \
\
(128,308) \
5,848
$
(137,849)
$
8,792
$
(115,790)
$
5,058
Attributable to:
The equity owner of the parent
Issued capital
Total liabilities and equity
Other operating income
Finance income
Other components of equity
6,199,022
1,601,399
1,292,236
Total liabilities
2010
$
Gross profit
2,128,460
Non-current financial liabilities
8,075,352
(5,438,635)
1,135,452
Defined benefit liability
2011
$
(6,630,189)
1,508,815
Long-term trade and other payables
2010
7,167,681
(6,288,476)
2,424,103
Current provisions
2,541,029
8,948,378 \
(7,346,979)
1,309,517
Current non-financial liabilities
$
\
US dollars
Cost of sales
2,069,476 \
Short-term borrowings
595,797
2011
Revenue
2,930,568 \
\
US dollars
Liabilities and equity
Trade and other payables
For the years ended December 31, 2011 and 2010
7,604
(24,444)
(2,944)
(22,059)
(2,546)
(152,752)
5,848
(137,849)
5,058
(602)
(959)
(543)
(829)
11,970
6,095
10,802
5,271
6,612
2,429
5,966
2,101
Other comprehensive income (loss):
Equity adjustments in equity method
Net gain on available-for-sale financial investments
Net gain on cash flow hedge accounting
Actuarial losses on defined benefit plans
(13,322)
(14,021)
(12,023)
(12,126)
Exchange differences on translation of foreign operations
(51,365)
(152,382)
(187,344)
70,649
(46,708)
(158,838)
(183,142)
65,066
Total comprehensive loss for the year, net of tax
\
(199,460) \
(152,990)
$
(320,991)
$
70,124
\
(204,431) \
(148,724)
$
(324,655)
$
72,505
\
(199,460) \
$
(320,991)
Attributable to:
The equity owner of the parent
54
4,971
(4,266)
(152,990)
3,664
(2,381)
$
70,124
55
Consolidated Statements of Changes In Equity
Consolidated Statements of Cash Flows
Retained
earnings
Issued capital
As of January 1, 2010
\
Equity
Other
attributable to
component of the owner of the Non-controlling
equity
parent
interests
1,354,276 \
838,581 \
8,842,274 \
2011
Total equity
63,223 \
8,905,497
-
8,792
-
8,792
(2,944)
5,848
Non-cash adjustment to reconcile profit (loss )
-
-
(959)
(959)
-
(959)
for the year to net cash flows
Net loss on available-for-sale financial
investments
-
-
6,095
6,095
-
6,095
Net gain on cash flow hedge
accounting
-
-
2,429
2,429
-
2,429
Actuarial losses on defined benefit
plans
-
(14,021)
-
(14,021)
-
(14,021)
Exchange differences on translation of
foreign operations
-
-
(151,060)
(151,060)
(1,322)
(152,382)
Total comprehensive loss for the year,
net of tax
-
(5,229)
(143,495)
(148,724)
(4,266)
(152,990)
1,480,779
-
-
1,480,779
-
1,480,779
-
(67,558)
-
(67,558)
-
(67,558)
As of December 31, 2010
US dollars
As of January 1, 2011
$
\
8,130,196 \
1,281,489 \
695,087 \
7,658,186
1,102,429
113,537
$
8,130,196 \
$
1,281,489 \
$
695,087 \
10,106,771 \
8,874,152
$
10,106,771 \
58,957 \
51,766
$
58,957 \
10,165,728
8,925,918
10,165,728
Loss for the year
-
(128,308)
-
(128,308)
(24,444)
(152,752)
-
-
(602)
(602)
-
(602)
Net gain on available-for-sale financial
investments
-
-
11,970
11,970
-
11,970
Net gain on cash flow hedge
accounting
-
-
6,612
6,612
-
6,612
Actuarial losses on defined benefit
plans
-
(13,322)
-
(13,322)
-
(13,322)
Exchange differences on translation of
foreign operations
-
-
(80,780)
(80,780)
29,415
(51,365)
Issue of share capital
Dividends
As of December 31, 2011
US dollars
\
$
-
(141,631)
(62,801)
(204,431)
4,971
(199,460)
835,000
-
-
835,000
-
835,000
-
(33,824)
-
(33,824)
-
(33,824)
8,965,196 \
8,418,807
$
1,106,034 \
945,271
$
632,286 \
(83,305)
$
10,703,516 \
9,280,773
$
63,929 \
55,433
$
2011
2010
\
(152,752) \
5,848 $
(137,849) $
5,058
652,517
156,389
588,857
Finance income
(95,594)
(7,350)
(86,267)
(6,356)
Finance costs
352,984
271,693
318,546
234,956
1,952,114
2,299,022
1,761,661
1,988,154
69,614
48,597
62,822
42,026
Depreciation of property, plant and equipment
Amortization of intangible assets other than goodwill
Equity in loss (earnings) of investments in associates and joint ventures
Net defined benefit pension plan costs
135,255
77,845
-
70,250
-
(66,335)
15,167
(59,863)
13,116
9,241
5,805
8,339
5,020
Other operating income
(91,522)
(16,495)
(82,593)
(14,265)
Other operating expenses
143,059
83,995
129,102
72,637
Other loss, net
Total adjustments
179,586
49,131
162,064
42,475
3,183,509
2,905,953
2,872,918
2,513,018
Changes in operating assets and liabilities:
Inventories
(381,896)
32,389
(344,637)
28,009
Trade and other receivables
(525,535)
(400,092)
(474,263)
(345,993)
Other receivables relating to operating activities
(154,497)
(203,558)
(139,424)
(176,033)
Trade and other payables
895,395
1,089,902
808,038
942,528
Other payables relating to operating activities
203,020
1,759,120
183,213
1,521,258
Payment of defined benefit liability
(13,983)
(6,954)
(12,618)
(6,014)
Provisions
238,533
1,095,388
215,261
947,272
20
-
18
-
(407,403)
(263,877)
(367,656)
(228,197)
50,486
58,305
45,560
50,421
Dividend received
Interest paid
Interest received
Income tax paid
Net cash flows from operating activities
Total comprehensive loss for the year,
net of tax
2010
Income tax expenses
Impairment loss on investments in associates and joint ventures
\
US dollars
Cash flows from operating activities:
Dividends
Korean won
Issue of share capital
56
6,649,417 \
(513,194)
(334,019)
(463,126)
(288,854)
2,421,703
5,738,405
2,185,435
4,962,473
10,767,444
9,336,206
57
Organization Chart
Consolidated Statements of Cash Flows
President & CEO
Audit Committee
Korean won
US dollars
2011
2010
2011
2010
(570,208)
(3,127,712)
(514,577)
2,704,791)
Acquisition of investments in associates and joint ventures
(90,946)
(237,311)
(82,073)
(205,222)
Proceeds from disposal of property, plant and equipment
50,266
125,273
45,362
108,334
(3,815,634)
(5,601,793)
(3,443,371)
(4,844,333)
-
13,145
-
11,368
(1,970,787)
(856,921)
(1,778,512)
(741,050)
-
5,282
-
4,568
Acquisition of available-for-sale financial investments
(23,250)
(32,588)
(20,981)
(28,182)
Decrease (increase) in long-term and short-term financial assets, net
(22,218)
310,181
(20,050)
268,239
-
(35,015)
-
(30,280)
67,446
-
60,866
-
Cash flows from investing activities:
Acquisition of a subsidiary, net of cash acquired
Acquisition of property, plant and equipment
Proceeds from disposal of intangible assets
Acquisition of intangible assets other than goodwill
Proceeds from disposal of available-for-sale financial investments
Increase in long-term loans
Decrease in long-term loans
Decrease in short-term loans
Settlement of derivatives
Net cash flows used in investing activities
265
136
239
118
(17,113)
38,571
(15,444)
33,354
(6,392,178)
(9,398,752)
(5,768,541)
(8,127,877)
Director & Senior
Planning &
Administration Group
Asia Group
America Group
Europe &
Africa Group
E&P Technology
Institute
Petroleum Stockpile
Group
Planning &
Coordination Dept.
E&P
Planning Dept.
Asia Business Dept.
America
Business Dept.
Europe & Africa
Business Dept.
Technology
Planning Dept.
Petroleum
Stockpile Dept.
General
Affairs Dept.
New
Ventures Dept.
Asia Exploration
Dept.
USA Office
United Kingdom
Office
G&G Dept.
Petroleum
Marketing Dept.
Finance
Management Dept.
Drilling & Subsea
Dept.
Offshore Rig
Operations Dept.
Canada Office
Nigeria Office
Petroleum
Engineering Dept.
Stock Engineering &
Construction Dept.
Process
Innovation Dept.
Overseas
Construction Dept.
Peru Office
Emergency
Planning Dept.
Ulsan Gas
Production Office
Geoje Office
Oil Research &
Information Center
Vietnam Office
Yeosu Office
Indonesia Office
Seosan Office
Russia Office
Pyeongtaek Office
Kazakhstan Office
Guri Office
Yemen Office
Yongin Office
Uzbekistan Office
Gokseong Office
Iraq Office
Donghae Office
Internal Auditing
Dept.
Ulsan Office
Cash flows from financing activities:
Proceeds from increase in issued capital
\
Proceeds from (repayment of) short-term borrowings, net
Repayment of current portion of long-term borrowings
Proceeds from long-term borrowings
Increase in bonds payables
Repayment of bonds payable
Dividends paid
Net cash flows from financing activities
Increase (decrease) in cash and cash equivalents before net effect of
foreign exchange differences
835,000 \
1,480,779 $
753,535 $
1,280,552
(1,114,541)
915,288
(1,005,803)
791,525
(194,892)
(113,393)
(175,878)
(98,060)
429,492
42,238
387,589
36,526
3,701,634
2,048,978
3,340,493
1,771,920
-
(88,541)
-
(76,569)
(33,824)
(67,558)
(30,524)
(58,422)
3,622,868
4,217,791
3,269,412
3,647,472
(347,607)
557,443
(313,694)
482,068
17,689
4,321
10,604
32,577
Increase (decrease) in cash and cash equivalents
(329,918)
561,764
(303,090)
514,645
Cash and cash equivalents at January 1
1,552,982
991,218
1,363,581
848,936
Net effect of foreign exchange differences in cash and cash equivalents
Cash and cash equivalents at December 31
\
1,223,064 \
1,552,982
$
1,060,491
$
1,363,581
Abu Dhabi Office
Offshore Rig
Area Office
58
59
Global Network
Russia Office
Harvest Operations Corp.
Embassy of the Republic of Korea
56 Plyushchikha st, Moscow, Russia
Tel. 7-495-783-2791
Fax. 7-4242-450-5841
Dana Petroleum Norway AS
2100, 330 - 5th Ave. SW Calgary,
AB T2P 0L4 Canada
Tel. 1-403-268-6596
Fax. 1-403-265-3490
Lilleakerveien 8, P.O.Box 260, NO-0216,
Oslo, Norway
Tel. 47-9327-3611
Uzbekistan Office
7th Fl., Block A, A4, International
Business Center, 107B Amir Timur Street,
Tashkent 100084, Uzbekistan
Tel. 998-71-120-4000
Fax. 998-71-120-0018
Dana Petoleum plc(UK)
17 Carden Place, Aberdeen, AB10 1UR
Tel. 44-122-465-2400
Fax. 44-122-465-2401
Kazakhstan Office
5th fl., Block 3B, B/C “Nurly-Tau” Business
Centre, 19/1, Al-Farabi Ave., 050013,
Almaty, Republic of Kazakhstan
Tel. 7-727-311-1521
Fax. 7-727-311-1503
North Atlantic Refining Limited
PO Box 40, 1 Refinery Rd. Come By Chance,
NL A0B 1N0 Canada
Tel. 1-709-579-5831
Fax. 1-709-463-8076
United Kingdom Office
10th Floor, New Zealand House, 80
Haymarket, London, SW1Y 4TE
Tel. 44-207-747-3011
Fax. 44-208-399-9929
Dana Petroleum Netherlands B.V.
Binckhorslaan 410, 2516BL, The Hague,
The Netherlands
Tel. 31-6-8333-8683
Fax. 31-70-371-3321
ANKOR E&P Holdings Corp.
1615 Poydras Street, Suite 1124
New Orleans, LA 70112, USA
Tel. 070-7725-7175
Fax. 1-504-587-6510
Houston Sub-office
Nigeria Office
5555 San Felipe Road, Suite 1130,
Houston, TX 77056
Tel. 070-7734-0035
Fax. 1-713-552-1898
Plot 934, Idejo Street,
Victoria Island, Lagos, Nigeria
Tel. 070-7725-3491
Fax. 234-1-271-5890
SAVIA-Peru
Av. Rivera, Navarrete 501,
San Isidro, Lima 27 - Peru
Tel. 51-9-9445-5446
Fax. 51-1-222-5947
Iraq Office
Yemen Office
58 Street, House No. 15,
Haddah Area, PO Box 16995,
Haddah, Sanaa, Republic of Yemen
Tel. 967-1-430-937
Fax. 967-1-429-321
515, 5th Floor, 4A West Wing Building,
Dubai Airport Free Zone, Dubai, UAE
Tel. 971-4-213-4012
Fax. 971-4-299-3937
Peru Office
Dana Petroleum Egypt
Calle Dionicio Derteano No.144 office
801B, San Isidro, Lima, Peru
Tel. 51-1-652-2685
Fax. 51-1-652-2689
Zahret El Maadi Tower(Second Building),
Corniche El Nile Road, Maadi, Cairo, Egypt
Tel. 20-12-239-2401
Vietnam Office
10th Floor, Diamond Plaza, 34 Le Duan St.,
Dist. 1, Ho Chi Minh, Socialist Rep.
of Vietnam
Tel. 84-8-3825-7709
Fax. 84-8-3825-7711
Singapore Sub-office
79 Robinson Road, #11-03 CPF Building,
Singapore 068897
Tel. 65-9672-0511
Fax. 65-6227-9516
Indonesia Office
Gedung BRI II 17th Floor,Jl.Jend.
Sudirman
No.44-46 Jakarta 10210, Indonesia
Tel. 070-7725-2612
Fax. 62-21-5793-2519
Domestic OFFICES
Geoje Office
Seosan Office
Guri Office
Gokseong Office
Ulsan Gas Production Office
8-7, Jisepo-ri, Irun-myeon, Geoje-si,
Gyeongsangnam-do, Korea
Tel. 82-55-680-1789
San 58-1, Daejook-ri, Daesan-eup,
Seosan-si, Choongcheongnam-do, Korea
Tel. 82-41-660-4114
297, Acheon-dong, Guri-si,
Gyeonggi-do, Korea
Tel. 82-2-2204-7700
612, Gyoejeong-ri, Gyeom-myeon, Gokseonggun, Jeollanam-do, Korea
Tel. 82-61-360-2114
400, Hagnam-ri, Onsan-enp, Ulju-gun,
Ulsan-si, Korea
Tel. 82-52-240-4700
Ulsan Office
Yeosu Office
Pyeongtaek Office
Yongin Office
Donghae Office
New HQ Building Construction TFT
450, Nakpodanji-gil, yeosu-si,
Jeollanam-do, Korea
Tel. 82-61-688-8700
1-37, Wonjeong-ri, Poseung-eup, Pyeongtaeksi, Gyeonggi-do, Korea
Tel. 82-31-680-1414
517-2, Ho-dong, Cheoin-gu,
Yongin-si, Gyeonggi-do, Korea
Tel. 82-31-329-4900
Block 2, Bukpyeong National Industrial
Complex, 226, Guho-dong, Donghae-si,
Gangwon-do, Korea Tel. 82-33-520-7800
Block 10-1, Ujeong Innovative City, Jung-gu,
Ulsan-si, Korea
Tel. 82-52-248-5780
300, Hagnam-ri, Onsan-eup, Ulju-gun, Ulsansi, Korea
Tel. 82-52-270-4400
57, 212nd Street, Gwanpyeong-ro, Dongan-gu,
Anyang-si, Gyeonggi-do, Korea, 431-711
Tel. 82-31-380-2114 Fax. 82-31-387-9321
www.knoc.co.kr

Expanding Our Horizons

Transcription

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