South Korea unveils sweeping energy sector overhaul with power and gas mergers

South Korea has announced a major restructuring of its state-run energy sector, unveiling plans to consolidate five power generation companies into a single entity and merge the country's national oil and gas corporations.

The reform, announced by the government on Thursday, is designed to accelerate the transition to renewable energy and improve operational efficiency across public institutions. Officials noted that the current fragmented structure of the power generation sector has resulted in overlapping investments and a lack of economies of scale.

As part of the same initiative, state-run Korea National Oil Corp (KNOC) and Korea Gas Corp (KOGAS) will be combined. The government believes this merger will strengthen the nation's ability to respond to supply chain disruptions and geopolitical risks, while also enabling a more integrated national strategy for oil and gas. The move is also expected to enhance South Korea's negotiating position with oil-producing countries and global energy companies.

Second Vice Finance Minister Huh Chang acknowledged that the government is mindful of concerns arising from differences in the financial structures of KNOC and KOGAS, and stated that the merger would be pursued in a manner designed to maximise synergies.

The location of the headquarters for the merged power company has not yet been finalised. Huh indicated that the matter remains under discussion, as the government has only outlined the broad direction of the reform. Further consultations, including with parliament and labour unions, will be required.

Beyond the energy sector, the government also plans to restructure a total of 109 public institutions through strategic reorganisation, consolidation of overlapping functions, and mergers of smaller bodies.