Korea National Oil Corporation Fails to Exercise Preferential Purchase Right, Crude Oil Exported Abroad

The Ministry of Industry and Petroleum Corporation has issued a caution to officials regarding the sale of 900,000 barrels of crude oil abroad. The Korea National Oil Corporation (KNOC) did not exercise its preferential purchase right for international joint oil reserves due to delays in response. The audit results show that KNOC and the Ministry of Industry did not actively respond to the crisis in crude oil supply and demand caused by the US-Iran war.

The KNOC failed to review or report the possibility of joint oil reserves being exported overseas if the exercise of priority purchase rights was delayed. The Ministry of Industry also did not instruct KNOC to immediately exercise its preferential purchase rights and did not report the related information to its internal managers. As a result, 900,000 barrels of joint storage oil were exported overseas.

However, it was concluded that the preferential purchase right was not a violation of regulations as it was a right under an international joint storage project contract between KNOC and Kuwait's state-run oil company (KPC). The Ministry also found that the management of crisis response manuals was insufficient. A warning was issued to officials for not properly maintaining the manuals.