Korea Firms to Boost Overseas Spending

SEOUL (Dow Jones), Jan. 19, 2010

South Korean companies plan to nearly double investments in overseas resources, including oil assets, this year to boost the country's energy self-sufficiency, the Ministry of Knowledge Economy said Tuesday.

The companies expect to invest $12.2 billion in overseas resources in 2010 compared with tentative investment of $6.73 billion in 2009, the ministry said in a statement.

State energy firms, including Korea National Oil Corp., expect to invest $8.3 billion in 2010, up from $5.64 billion last year, while private sector companies plan to spend $3.9 billion this year, up from $1.09 billion in 2009.

In 2010, state-run KNOC plans to invest $6.5 billion or more in acquiring an overseas oil firm that has daily production capacity of 50,000-100,000 barrels, while state-run Korea Gas Corp. plans to invest about $1 billion in oil development projects in Iraq, the ministry said.

Accordingly, the government plans to achieve an oil-and-gas self-sufficiency ratio to 10% or higher in 2010, eclipsing its previous target of 9.1%. At the end of 2009, the ratio stood at 8.1%.

KNOC has been aggressively expanding its assets this year to bolster the resource-poor country's energy security.

In December, KNOC and its Kazakhstan partner, which it hasn't identified, purchased Kazakhstan's Sumbe for $335 million. Also last year, KNOC bought Canada's Harvest Energy Trust for C$4.1 billion, in South Korea's largest overseas energy investment to date.

Early last year, KNOC and Colombia's state-controlled Ecopetrol SA jointly purchased Peru's PetroTech Peruana SA for $900 million.

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