SINGAPORE (Dow Jones Commodities News via Comtex)
State-run Korea National Oil Corp. will likely sign a deal to acquire an oil sand deposit in Canada in July, the Ministry of Commerce, Industry and Energy said.
"Unless an unpredictable event occurs during the course of negotiations, a deal for acquiring the oil sand is expected to be signed in July," the ministry said in a statement. It added that negotiations, which began in April, are in the final stages.
The oil sand deposit, located in Alberta, Canada, has crude oil reserves estimated at 250 million barrels.
KNOC plans to begin construction of production facilities in 2008 and to start producing a maximum 35,000 barrels of crude oil a day from around 2010, representing 30% of the total daily production volume of the country's current overseas crude oil assets, the ministry said.
The ministry didn't indicate the expected investment required, and an official at KNOC declined to comment as negotiations are still under way.
It said that, in line with government support for the deal, South Korea's commerce minister is visiting the site. The trip is also being made in order to study the feasibility of encouraging South Korean companies to build refineries in Canada.
Oil sands are a mixture of sand and clay that contain crude bitumen, which can be refined into crude oil. Producing crude oil from oil sands used to be considered costly, but record high oil prices have made production from oil sands more economically feasible.
With crude oil reserves from oil sands included, Canada has the third-largest reserves in the world, behind Venezuela and Saudi Arabia.
A Canadian Association of Petroleum Producers' forecast in May predicted that crude oil production from Canada's oil sands would climb from around 1 million b/d currently to 3.5 million b/d by 2015, and 4.0 million b/d by 2020.
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