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State oil firm hit by falling oil prices outlines restructuring plans

All Headlines 15:43 March 04, 2016

SEOUL, March 4 (Yonhap) -- Korean National Oil Corp. (KNOC) said Friday it will conduct drastic restructuring measures for years to come after inking extended losses last year due mainly to falling oil prices.

In a statement released on Friday, its 37th foundation day, the state-run oil company has outlined packages of self-rescue programs that include massive job cuts, wage reduction and sale of its domestic headquarters building and other non-core assets.

The move comes after the KNOC's net losses deepened to 4.5 trillion won (US$3.98 billion) for the whole of last year from 1.6 trillion won a year earlier, a company official said Friday, citing 2015 financial earnings results approved at the company's board meeting on the same day.

The KNOC's final full-year figures are due out late this month in a regulatory filing run by the Financial Supervisory Service.

"As oil prices continued to nosedive until recently, the translated value of gas and oil fields we own overseas or in which we injected cash for investment gains fell sharply last year amid currency volatility. It resulted in hefty losses," the official said.

Under the broad restructuring steps, the KNOC plans to cut 30 percent, or 1,258 employees, of its overall workforce by 2020, with a plan to cut workers in five overseas business offices which govern oil and gas blocks in countries such as Iraq and the United States, he said.

Moreover, some 4,200 executives and employees at KNOC have decided to receive 10 percent less of their annual salaries this year. The oil utility also seeks to reduce operating costs by 10 percent this year to stay afloat. The headquarters building in Ulsan, 414 kilometers southeast of Seoul, is up for sale. The price tag for the building is estimated to be around 200 billion won, said the statement.

The KNOC said it will raise at least 400 billion won through the self-help efforts by 2018, while trying to attract strategic investors.

kyongae.choi@yna.co.kr
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