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Korean Gas Monopoly and World’s Largest Gas Importer

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Background

Korea Gas Corporation (KOGAS) mainly engages in the distribution of natural gas. It was incorporated by the Korean government in 1983 and is the world’s largest liquefied natural gas (LNG) importer.

#Korea Gas Corporation was incorporated by the Korean government in 1983 and is the world’s largest #LNG importer

With almost 4,000 employees KOGAS has the monopoly for natural gas in Korea and currently operates four LNG terminals and a pipeline network of over 4,790km.

Business Description

KOGAS is a Korean government monopoly and it operates through two segments: Sales of gas and exploration & production.

Sales of gas mainly includes imports and distribution of over 30m tons of liquefied natural gas (LNG) to large-scale consumers and city gas companies for power generation as well as household and industrial uses.

#Korea Gas is a Korean government #monopoly and it operates through two segments: Sales of gas and exploration & production

Besides distribution of gas, the company also engages in exploration & production projects in both Korea and abroad. KOGAS has investments in exploration projects in Indonesia (field size: 1,255km2; stake: 15%), East Timor (1,540km2; 10%) and Cyprus (12,523km2; 20%). It is also developing 82km of pipelines in Mozambique with a 70% stake.

With easing sanctions on North Korea, a gas pipeline to unite Russia and the Koreas should be constructed. KOGAS would directly benefit with an additional 5m tons gas per year.

The Korean government aims at a 20% storage-to-sales target in the 12th and 13th Long-term Natural Gas Supply/Demand Plan to favor the closing of shorter-term contracts for better long-term deals.

Leadership

Seung-Il Cheong was appointed as the president and CEO of Korea Gas in the beginning of 2018. Mr. Cheong has experience as a civil servant at the Ministry of Trade, Industry, and Energy (NOTIE) also serving as commercial counselor at Korean embassies in UK and US, and a Director General FTA.

Seung-Il Cheong was appointed as the president and CEO of #Korea Gas in the beginning of 2018

World Class Benchmarking

Profitable Growth had sunk to the bottom in 2015 and stayed there until a slight improvement in the past 12 months. Korea Gas ranked in the bottom 93 out of 310 large Utilities companies worldwide.

Same as for Profitable Growth, there was an improvement in Profitability rising to #8 from #9 in the past 12 months. Growth jumped to #2 from #9 in the most recent period.

Profitable Growth at #Korea Gas had sunk to the bottom in 2015 and stayed there until a slight improvement in the past 12 months

Asset utilization has stayed above average for the whole time period and ranked at #3 since 2017. Profit margin has kept its poor #9 rank for all past five periods.

In 2017, Sales growth improved to #6 from #10 and inched up to #5 in the past 12 months. Margin change has ranked about average for the whole time period.

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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.

Posted in Korea, World Class Benchmarking