DAEGU — Daegu and Ulsan are moving toward a contest over where to place the headquarters of a merged entity combining Korea Gas Corporation and Korea National Oil Corporation, a merger included in the government's plan to overhaul the functions of state-run institutions.
Ulsan, home to the oil corporation, argues the headquarters of the merged entity — tentatively named Korea Energy and Resources Corporation — should be chosen based on strengthening future-oriented functions. Daegu, home to the gas corporation, counters that organizational scale and the stability of the national energy supply chain should be the deciding factors.
Ulsan Mayor Kim Sang-wook called on the 7th for the merged headquarters to be located in Ulsan, saying it would strengthen the future-oriented functions of Korea Gas Corporation and Korea National Oil Corporation.
Kim made the argument in a statement on the headquarters of the tentatively named energy and resources corporation, released at the Ulsan City Hall press center.
On the government's plan to overhaul the functions of state-run institutions, Kim said he strongly supports the initiative, noting that public agencies had proliferated and been distributed across the country in a piecemeal fashion, resulting in widespread inefficiency and unfairness.
"What matters is exactly what the name says — pursuing functional reform," he said. "Political considerations, regional self-interest and dividing up the spoils would only create another set of ills, so the standard should be strengthening functions through concentration, based on what benefits the entire public more."
"If Ulsan is reborn as an energy hub for Northeast Asia, it will bring great benefits to all of South Korea," he said. "To that end, please concentrate energy-related state-run institutions and functions, including the energy and resources corporation, in Ulsan."
Kim's argument rests on the port of Ulsan, the country's largest liquid cargo port and the fourth largest in the world, handling vast volumes of oil, natural gas and naphtha. If energy-related state-run enterprises and research institutes are concentrated there and research and development is carried out actively alongside companies, he said, the city would become the largest energy hub in Northeast Asia.
Daegu, by contrast, officially announced a day earlier that the merger of the gas and oil corporations should center on the gas corporation and that placing the headquarters in Daegu is appropriate.
In its statement, the city said the merger should be approached as a strategic organizational redesign aimed at stabilizing the national energy supply chain and strengthening capacity to respond to resource security concerns, rather than as a simple combination of institutions or a competition between regions to host it.
The city stressed in particular that Korea Gas Corporation should be the center of the merger because it is far larger than Korea National Oil Corporation in organization, assets and revenue.
Based on last year's settlement of accounts, Korea Gas Corporation had 4,305 employees, about three times the oil corporation's 1,456.
Total assets stood at 53.6278 trillion won for Korea Gas Corporation and 19.4442 trillion won for Korea National Oil Corporation, while revenue differed sharply at 35.7273 trillion won and 3.1365 trillion won, respectively.
The city also argued that combining oil functions into the gas corporation's existing supply chain management system would be more efficient, since the core functions of the merged corporation lie in strategy, planning and control — managing national energy supply and demand, setting strategy for overseas resource development and imports, responding to supply chain crises and integrating the operation of energy infrastructure nationwide.
Daegu Mayor Choo Kyung-ho said Korea Gas Corporation should be the center of the merger when organizational scale, operating systems, supply chain control capacity and policy continuity are considered together. "Daegu, where the gas corporation is located, is the most suitable site for the headquarters of the merged corporation," he said.
