SEOUL Oct 20, 2006 (Dow Jones Newswires)
South Korea's state-owned Korea National Oil Corp. will acquire a 25% stake in an onshore oil field in Kazakhstan from LG International Corp. (001120.SE), which will continue to hold 25% in the field, a company official said Thursday.
"We will complete the deal to buy the 25% stake in the Egizkara oil field from LG International as early as mid November, with approval from the board of directors," Choi Kyung-Sik, who is in charge of the Egizkara project at KNOC, told Dow Jones Newswires.
Choi didn't elaborate on how much KNOC will invest in the project, but he said the company has already allocated a portion of its budget for purchasing the stake.
The remaining 50% stake in the field is shared by multinational investors.
A spokesman for LG International confirmed Thursday that Jang Hyun-Sik, vice president of LG International's energy division, recently said the company was in talks with KNOC on selling it the stake.
"KNOC's advanced development technologies and know-how in overseas E&P projects will be of great help in pushing forward the Egizkara project," said the spokesman.
LG International plans to start drilling at the field, located near the Caspian Sea, in the second half of 2007, with exploration ending in December 2010.
The Egizkara oil field, which has estimated reserves of 200 million barrels, is LG International's third project in Kazakhstan.
The other two projects are the onshore ADA block, with estimated reserves of 170 million barrels, and the adjacent onshore Block 8, with estimated reserves of 250 million barrels, both also located near the Caspian Sea.
Next year, the company plans to begin exploration at Block 8 with SK Corp. (003600.SE), South Korea's largest refiner by capacity, in a 50-50 joint venture.
Early this year, KNOC formed a consortium with LG International under which each owns a 22.5% stake in the ADA block project and will announce a detailed development and investment plan to produce oil from the field next year.
LG International has discovered the equivalent of 20 million barrels of the estimated 170 million barrels of reserves since it began exploration of the ADA block in August this year. The company said it was unsure how long the project would last, as it depends on its development.
LG International is targeting earning more than 60% of its overall profits from overseas energy exploration by 2010.
Copyright (c) 2006 Dow Jones & Company, Inc.
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