By Kim Hyun-cheol
Staff Reporter
The Korea National Oil Corp. (KNOC) is set to acquire a foreign-based private oil firm as part of its expansion plans, with an announcement expected soon, industry sources said Wednesday.
The acquisition is part of a plan to have the state-run company produce 300,000 barrels daily by 2012. The total bill for the plan is estimated at 19 trillion won ($13.8 billion), and under it, the asset size of KNOC will grow from 9.4 billion won to nearly 30 trillion won through the purchase of more overseas oil fields and possible takeovers, the Ministry of Knowledge Economy said.
The government plans to inject around four trillion won out of some 19 billion won needed for the projects, with the rest to be raised through loans and KNOC's internal funds.
Last month, KNOC was reported to have greed to buy Peru's Petro-Tech Peruana, which owns offshore assets in the Latin American country, by purchasing a 50-percent stake and management rights for $1 billion. The Ministry of Knowledge Economy, however, said nothing has been confirmed about the deal.
Korea's merger and acquisition efforts are part of a global trend this year, while exploration and development ventures will likely decrease because of falling oil prices.
In July last year, British Petroleum America announced it had acquired a $1.8-billion asset in Chesapeake Energy Corporation of the United States, while India's state-run Oil and Natural Gas Corporation followed the next month by taking over U.K.-based Imperial Energy for $2.6 billion.
Meanwhile, Shell delayed its second-phase process of developing oil sands in Athabasca, in Alberta, Canada, and Canadian firms such as Nexen and Canadian Natural Resources are likely to follow suit.
America's Pioneer has recently announced it will cut its investment budget by 30 to 60 percent this year, and XTO Energy also plans to cut down investment in exploration nearly 20 percent from its initial target of $4.6 billion.
Global oil prices have been consistently dropping since last July, when they surpassed the $140-per-barrel mark for the first time. As of the end of 2008, they stood at around $36, down 60 percent from the beginning of the year.
Most major firms are putting their ongoing projects aside. Other postponed energy exploration projects by major players include British Gas' final investment decision on the Karachagnak oil field in Kazakhstan, as well as Chevron's Gorgon liquefied natural gas project in Australia.