South Korea Eyes Caspian Sea as Oil Source

South Korea, the world's fourth biggest importer of crude oil and oil products, is eyeing upstream investment in the oil-rich Caspian Sea to reduce its dependence on the Middle East, the energy ministry said yesterday.

The move is in line with South Korea's aim to boost crude oil imports from sources in which it has stakes to 10 per cent of annual crude imports by 2010 from a current two per cent, the ministry said in a statement.

"The Caspian Sea and neighbouring region are emerging as a major crude source after the Middle East and large scale of investments by major oil companies are under way," it said.

The ministry said crude oil reserves in an around the Caspian Sea were estimated at 260 billion barrels of oil.

"It is urgent to secure a bridgehead to help Korean firms move to such area with high potential in a bid to reduce our dependency on the Middle East," it added.

Seoul imported 859 million barrels of crude oil last year of which 77 per cent came from the Middle East.

State-run Korea National Oil Corp (KNOC) has formed a consortium for the project with Korean companies including top oil refiner SK Corp, trading firm LG International Corp and Samsung Corp, it said.

The consortium, formed late last month, plans to launch a feasibility study on the Caspian Sea and Seoul will cover half the research costs, it said.

Pointing to the Republic of Kazakhstan as a strategic position to move into the Caspian Sea area, the ministry is sending a seven-member delegation of government and company officials there this week and another team in May.

The delegations will seek cooperation from the Kazakhstan government and detailed data about oilfields, it said.

The ministry expects to select an oilfield in July and start negotiating, it said.

Kazakhstan has 28.5 billion barrels of crude oil reserves and produces 1.06 million barrels oil crude a day, the ministry said quoting Wood Mackenzie data issued in January this year.

South Korea is involved in 56 upstream oil projects in 23 countries.