Tar sand new issue alert: Korea National Oil Corporation

5 minute read

Korea National Oil Corporation (KNOC) is starting investor calls for a forthcoming bond transaction. Given the significant tar sand exposure of KNOC, we advise syndicating banks to make full disclosures thereof, and investors (especially the big Swiss ones) to request a carbon footprint on behalf of KNOC.

KNOC is not disclosing data to CDP so its carbon footprint is hard to estimate. However, it has total prominent production facilities in Libya, Yemen, Venezuela, Kazakhstan, Iraq, the North Sea, and large-scale shale operations in the US. Most importantly KNOC also has tar sand operations through the Harvest subsidiary in Canada.

We believe it is reasonable to expect that KNOC commences carbon emissions disclosure to CDP or any other organisation such that investors can start tracking the carbon impact of potential lending to KNOC. We also believe that it is reasonable to expect that banks themselves that have restrictions on investing in tar sand operations should not be part of the stabilisation effort of the new potential KNOC bonds, nor any other “market action” in association with the syndication that effectively means the banks themselves taking balance-sheet exposure to KNOC.