[Edaily Reporter Kim Hyung-wook] #Korea Gas Corporation (KOGAS) announced on the 14th a plan to recover an additional 5 trillion won in investment costs from its overseas resource projects by 2030. This move is interpreted as an effort to emphasize not only its core role as a listed public enterprise—ensuring a stable domestic supply of natural gas—but also its commitment to enhancing shareholder value through profits from overseas operations.

KOGAS stated on the same day that it has recovered approximately 3 trillion won in investment costs from overseas resource projects over the past three years and plans to recover an additional 5 trillion won or more by 2030. While there had been criticism until a few years ago that the pace of recovering investment costs from overseas resource projects was slow, the company claims it has now entered a full-fledged phase of investment recovery as natural gas production from investment projects in Australia and other regions has stabilized.

As a public enterprise responsible for ensuring a stable supply of natural gas, KOGAS has invested over $12 billion (approximately 18 trillion won) in various overseas resource development projects since 1996. However, as of 2023, the recovery rate was less than half of the total investment, leading to criticism that the company had pursued overly aggressive overseas resource development.

However, with international natural gas prices surging during the Russia-Ukraine war that broke out in 2022 and the Middle East conflict that erupted this past February, a reassessment of these earlier investments is currently underway. Although rising international prices increase KOGAS’s import costs, profits from its stakes in overseas gas fields partially offset this burden. If KOGAS recovers an additional 5 trillion won in investment funds by 2030 as planned, it is expected to significantly boost the recovery rate relative to cumulative investment and accelerate the transition to a profit-recovery phase.

Buoyed by this, KOGAS finalized its investment in the Mozambique Coral II project last October, targeting production in 2028, and plans to decide by the end of this year on investments in the second phase of the Canadian liquefied natural gas (LNG) project and the Mozambique Lobuma project.

The announcement of the recovery of overseas resource project investments and the disclosure of additional investment plans on this day is also interpreted as a rebuttal to criticism from some quarters that efforts to enhance shareholder value have been insufficient.

KOGAS is currently facing a financial crisis, having absorbed the shock of soaring natural gas import costs resulting from the Russia-Ukraine war in 2022. Due to 14 trillion won in unpaid receivables stemming from the government’s suppression of city gas rates, its debt stood at 43 trillion won as of the end of last year. This represents an increase of approximately 16 trillion won from the 27 trillion won recorded in June 2021. As the country’s sole natural gas wholesaler, KOGAS imports 34 million tons of liquefied natural gas (LNG) annually and bears the operational burden of managing 77 LNG storage tanks and a 5,346-kilometer pipeline network to store and distribute the gas nationwide.

However, the company explains that through overseas business profits and self-reliance efforts, it has reduced its debt from 52 trillion won (debt-to-equity ratio of 500%) at the end of 2022 to 43 trillion won (debt-to-equity ratio of 397%). Furthermore, it continues to enhance shareholder value by paying dividends exceeding the average dividend yield of common shares on the stock market.

Choi Yeon-hye, President of KOGAS, stated, “With a deep sense of responsibility for ensuring a stable supply of natural gas and enhancing shareholder value, the company has worked tirelessly to achieve supply stability and lay the groundwork for sustainable growth.” She added, “We will continue to develop into a company trusted by the public, consumers, and shareholders alike.”