S Korean Group Buys 20 Per Cent Stake in Azerbaijani Oil Field

Text of report in English by South Korean news agency Yonhap

SEOUL, Oct. 10 (Yonhap) – A South Korean consortium led by a state-run oil company has bought a 20 per cent stake in an oil field being developed in Azerbaijan, the government said Wednesday.

Korea National Oil Corp., GS Caltex and other energy-related companies bought stakes from Royal Dutch Shell PLC, which controlled a quarter of the offshore block, the Ministry of Commerce, Industry and Energy said.

Azerbaijan’s State Oil Company owns 50 per cent of the Inam oil field with British oil giant BP holding a 25 per cent stake and the operating rights.

“The actual deal was signed on July 12 but it had to receive final authorization from Baku,” said Lee Seung-woo, head of the ministry’s oil and gas development team.

He said the deal allows South Korea to gain a important foothold in the Central Asian country that has large reserves of oil and gas.

Giant oil and gas companies, including BP and Chevron, have secured most of the rights to large-scale projects in the country, making it hard for latecomers to make inroads.

Inam covers 450 square kilometres and could hold up to 2 billion barrels of crude oil. South Korea’s portion will be 400 million barrels.

Full-scale drilling is to take place at the end of the year, with commercial production expected to begin in 2015.

The purchase is part of Seoul’s effort to enhance its self- sufficiency in oil and gas to insulate the country from sudden fluctuations in energy prices.

South Korea’s self-sufficiency in oil and gas stood at 3.8 per cent of total domestic demand in the first half of this year, with efforts underway to increase the figure to 28 per cent by 2016.

Originally published by Yonhap news agency, Seoul, in English 0249 10 Oct 07.

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