KNOC-Led Group Acquires Stake in Zhambyl Block

Dow Jones Newswires

SEOUL (Dow Jones Newswires), May 15, 2008

A South Korean consortium led by the state-owned Korea National Oil Corp. has signed a final contract to acquire a 27% stake in Kazakhstan's offshore Zhambyl oil block for $85 million from a state-run company, KNOC said Thursday.

The Korean consortium and KazMunaiGas will jointly explore and develop the block, located in the northwestern Caspian Sea, KNOC spokesman Bae Ho-Jun said.

Exploration activity - which was originally expected to start in the second half of 2007 - will soon kick off following the delayed final agreement, another KNOC spokesman Kim Seon-Ho said.

"The Zhambyl investment is part of the government's drive to increase overseas energy investments to seek a stable supply of oil and gas," Kim said.

In January, Korean consortiums led by KNOC purchased oil assets in the Gulf of Mexico and the Republic of Congo (Brazzaville) for more than $1.435 billion, securing reserves of 90 million barrels, or 21,400 barrels a day.

The other consortium participants are SK Energy Co. (096770.SE), Samsung C&T Corp. (000830.SE) and LG International Corp. (001120.SE), said Bae.

Bae said the Korean firms will have the right to purchase another 23% stake in the block if exploration and production activities are successful.

The Zhambyl block is estimated to have more than 1 billion barrels of oil in reserves, more than South Korea's annual oil imports of 870 million barrels for domestic consumption, he said.

KNOC expects South Korea will be able to supply 5.7% of its annual oil and gas needs in 2008 from overseas fields it owns or has jointly developed, up from 4.2% a year earlier.

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