S. Korea aims to buy two foreign oil companies by year's end

(ATTN: UPDATES with more details in para 3; ADDS with new information from para 8)
By Lee Joon-seung
SEOUL, Sept. 22 (Yonhap) -- South Korea wants to buy at least two foreign oil
companies by year's end to significantly raise the country's crude reserves, a
senior government official said Tuesday.
Vice Knowledge Economy Minister Kim Young-hak told reporters that "exclusive"
negotiations are underway with five prospective sellers and that mergers and
acquisition deals with two may be reached this year.
The official, who declined to go into specifics, said depending on what companies
are bought, the total volume of oil that can be produced from fields controlled
by South Korean companies could shoot up from 1.1 billion barrels at present to
around 6.5 billion barrels.
"South Korea can generate roughly US$9 billion worth of funds through various
financing arrangements that can facilitate any merger deal," Kim claimed.
He said the potential increase does not include the Bazian oil field and several
others in northern Iraq in which South Korea already has stakes. Those fields
could yield up to three billion barrels total.
The state-run Korea National Oil Corp. said earlier in the month that drilling in
the Iraqi fields should begin in October with results likely to be out by late
December.
South Korea relies almost exclusively on foreign imports for its oil. It has
steadily bought up foreign oil fields or acquired stakes to push up the country's
self-sufficiency level in fossil fuel resources to 6.3 percent as of June from
4.2 percent in 2007.
Reflecting growth in the total amount of fossil fuel reserves, the Ministry of
Knowledge Economy said output of oil and gas produced by South Korean-controlled
operations reached 188,000 barrels per day this year from 125,000 barrels in 2007
and 71,000 barrels tallied for 2002.
Seoul has started focusing on acquiring operational fields and bought stakes in
the Petro-Tech Peruana S.A. in Columbia. It has also taken hold of some offshore
fields in the Gulf of Mexico.
The ministry, which is in charge of the country's industrial and energy policies,
said that besides oil and gas, South Korea's self-sufficiency in six major
strategic raw materials rose from 18.5 percent of all domestic needs three years
ago to 25.9 percent as of late June.
The six materials are iron ore, copper, bituminous coal, uranium, zinc and nickel.
The government, meanwhile, said it will spend 3.4 trillion won (US$2.8 billion)
from 2010 through 2012 to promote the acquisition of overseas resources. This
comes after Seoul spent 2.6 trillion won from the 2008-2009 period.
yonngong@yna.co.kr
(END)