SEOUL, Dec 26, 2006 (Dow Jones Newswires)
State-owned Korea National Oil Corp. is seeking to buy one or two oil fields next year, possibly in the Caspian Sea region, a top KNOC official said Friday.
South Korea currently co-owns seven oil fields in six countries, namely, the U.K., Venezuela, Libya, Peru, Vietnam and Indonesia - and it doesn't intend to stop there. In fact, It has been actively looking to pick up more petroleum assets and companies abroad, particularly those in Central Asia.
"We will target to buy one-to-two oil producing blocks next year, and resources-rich countries near the Caspian Sea are in consideration," Kim Seong-Hoon, executive vice president of KNOC's New Ventures & Exploration, told Dow Jones Newswires in an interview.
Caspian Sea is bordered by Russia, Azerbaijan, Iran, Kazakhstan, and Turkmenistan.
To help South Korea meet 18% of its annual oil and gas needs in 2013 from overseas fields that it already owns or has jointly developed, KNOC will consider acquiring stakes in foreign oil companies, said Kim.
By contrast, in 2005, oil and gas from overseas assets met only 4.1% of the country's energy requirements.
Kim said the oil companies that KNOC is interested in should be small, independent companies and not major companies such as BP Plc (BP), Exxon Mobil Corp. (XOM), Chevron Corp. (CVX) and TotalElfFina, which will necessarily involve much bigger price tags.
Given recent geopolitical volatility in the Middle East and soaring international oil prices, South Korea, like China and India, is seeking to diversify its energy sources. In particularly, it is looking to bolster its energy security by tapping into resources that it owns or intends to acquire overseas.
South Korea will also seek more deals in which it helps oil-rich nations establish infrastructure such as roads, bridges and ports in exchange for operating rights to oil fields, Kim said.
In March this year, a South Korean consortium led by KNOC spent $90 million on a 60% stake in two Nigerian oil blocks - OPL 321 and 323. In return, South Korea is to build two gas-fired power plants and a network of gas pipelines in Nigeria - Africa's biggest oil producer.
"The Korea-Nigeria package deal is a good case to follow. Korea will be able to help countries, which are rich in resources but poor in infrastructure, have a well-established infrastructure in return for stakes in oil blocks," said Kim.
"It's a reciprocal deal."
South Korea's strategy isn't unlike the course that China has taken, and firmly marks Seoul's entry into the global race for oil and gas. Earlier last month, China's President Hu Jintao offered $5 billion in loans and credits, and more aid, to expand Chinese access to Africa's natural resources such as oil and metals.
In other efforts to secure a stable supply of energy for South Korea, the executive vice president said KNOC may consider buying another oil sands block in Alberta, Canada, next year.
Earlier in July, KNOC purchased BlackGold oil sands block, also in Alberta, which has an estimated oil reserves of 175 billion barrels in total. The block, in which KNOC invested $270 million, has 216 million barrels in estimated reserves.
Copyright (c) 2006 Dow Jones & Company, Inc.
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