Two S. Korean firms fail screening for Iraqi oil deal

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By Nam Kwang-sik
SEOUL, April 3 (Yonhap) -- Two South Korean oil companies failed a second
prequalification screening of eligible bidders for oil field development in
southern Iraq, company officials said Friday.

The two companies -- top refiner SK Energy Co. and the state-run Korea National
Oil Corp. (KNOC) -- took part in the screening in January.
"We believe that the failure of the screening came from failing to meet Iraq's
requirements," said Jeon Byong-hyuk, a spokesman for KNOC.
An official at SK Energy, who asked not be identified, also confirmed the company
had failed the screening.
Nine oil companies were selected out of 38 bidders hoping to develop oil fields
in southern Iraq, the SK Energy official said.
On Thursday, Iraqi oil minister Hussein al-Shahristan told South Korean
ambassador Ha Tae-yun that the two companies would not be allowed to bid on the
oil fields due to a preliminary deal they had signed last June with the
government of Iraqi Kurdistan to tap eight oilfields in the semiautonomous region
in northern Iraq.
That deal is expected to give the two companies the rights to gain access to
about 2 billion barrels of untapped crude oil out of an estimated 7.2 billion
barrels that may be in these fields.
In return for the deal, a South Korean consortium of seven builders including
Hyundai Engineering & Construction Co. signed a US$10.78 billion deal to build
infrastructure in northern Iraq for five years after the oil projects start.
The central government of Iraq banned oil exports to SK Energy in January last
year, after the South Korean firm secured an agreement with the Kurdistan
government to tap the Bazian oil field in November 2007, claiming the deal was
illegal.
That ban was lifted in January of this year on condition that the refiner scrap
the Bazian deal,
South Korea and Iraq signed in February a $3.55 billion deal to help rebuild the
war-torn Middle Eastern nation and build various forms of social infrastructure.
Iraq also agreed to give South Korea the rights to develop oil reserves in Iraq's
Basra region, where most Iraqi oil is produced.
ksnam@yna.co.kr
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