Warning of Movements of Energy Oil Industry

In the domestic energy oil industry, `Big 3 Sales` will be decided and so the movements will occur in the related industry.

In a current market `BIG 3` offerings include Korea South-East Power affiliated with KEPCO, Hyundai Petrochemical and Inchon Oil Refinery Company.

According to the related industry on November 18, depending on companies that acquire such companies which have at least over KRW 1 trillion of asset values, the related industries will show changes in a domain of the business circles.

The sale of Korea South-East Power is an important work for a reorganization of the power industry. In a bid for a management right sale of Korea South-East Power, 8 foreign firms including Chevon Texaco, USA and 6 domestic firms including SK, POSCO, LG Caltex Oil, KIECO, Hyosung and Samtan were participated.

KDN and the related industry have regarded that the domestic and foreign companies are highly likely to organize a consortium as the asset value of Korea South-East Power exceeds KRW 2 trillion∼3 trillion. KDN and Korea South-East Power plan to have a sale negotiation by selecting the targets of preferential negotiation at the end of the year, or at latest until next January.

On the basis of a single company, Hyundai Petrochemical will change the oil industry. Hyundai Petrochemical`s official said, “It will not only change a ranking of the Asian market and domestic market, but also detonate a corporate restructuring of the domestic oil companies over the international competitors.”

Such as Woori Bank, the creditors of Hyundai Petrochemical will select the target of the preferential negotiation within the week. It is forecasted that the consortium of LG Chem and Honam Petrochemical Corporation is likely to be selected.

In September, the first bidding was conducted, but there was no bidder. Inchon Oil Refinery Company under the second bidding plans to accelerate the sale process by selecting the companies subject to the preferential negotiation within the year. Several domestic and foreign companies have been reviewing L/I(letter of intention) for the acquisition.

The company`s official said, “To receive the final approval of the court receivership at the end of next March, the company subject to acquisition must take shape at latest within the year.”

The oil industry regards that the industry will depend on the sales direction of Inchon Oil Refinery Company.

Ja-Ryong Koo bonhong@donga.com