KNOC Prepared to Pay $250 Mln on Russian Exploration

Korea National Oil Corp. is prepared to invest $250 million to explore two prospective areas of oil and gas reserves off Russia's far east coast, carrying the costs of project partner OAO Rosneft (RNT.YY), a senior KNOC manager said Thursday.

Jin Seok Kim, senior vice president for exploration and production, said he expects KNOC to give its final approval in the next few days, and a project working group to be convened Nov. 1.

"I am quite confident that we will get the go-ahead," Kim told reporters on the sidelines of an oil and gas conference. "It's typical in instances such as these for the foreign partner to pay all up-front costs of exploration."

Kim declined to say when exploratory drilling at the sectors may start.

According to estimates, $100 million will be required to develop the Veninsky sector of the Sea of Okhotsk, part of the Sakhalin-3 group of prospects. A Rosneft spokesman said Veninsky is estimated to hold 374 million barrels of oil, 37 million metric tons of gas condensate and 580 billion cubic meters of natural gas.

An additional $150 million will be spent in the west Kamchatka area.

These are preliminary figures which will be scrutinized later, Kim said.

Kim added that he hopes the management of Russian gas monopoly OAO Gazprom (GSPBEX.RS) will support the project. Gazprom is any case due to absorb Rosneft in the course of the next few months.