South Korea aims to double its equity oil and gas production from overseas to 640,000 b/d of oil equivalent by 2012, from 342,000 boe/d in 2010, the country's energy ministry said Thursday.
This will boost the country's self-sufficiency ratio to 20% in 2012. South Korea's overseas equity oil and gas production accounted for 10.8% of the country's total imports in 2010, up from 241,000 boe/d or 8.1% in 2009 and 186,000 boe/d or 5.7% in 2008, the Ministry of Knowledge Economy, responsible for energy, industry and commerce, said in a statement.
The target was announced at a national economic policy meeting chaired by President Lee Myung-Bak to discuss energy policies to ensure "sustainable economic growth by promoting stable supplies of energy sources," the ministry said.
To meet the target, South Korea plans to make acquisitions in overseas oil and gas fields as well as lift output from existing assets.
"If the recent oil field development deal with the United Arab Emirates makes headway as expected, it would boost the self-sufficiency ratio by four percentage points," it said.
In March, South Korea inked an unprecedented oil deal with the UAE worth a potential $100 billion, providing Seoul with the right to develop three fields containing 570 million barrels of oil, access to a 1 billion barrel oil concession and 6 million barrels of Abu Dhabi crude for its strategic reserve. South Korea's energy ministry said then it would secure 126,000 b/d of crude through the massive deal, raising its self-sufficiency ratio to 15%.
"The government is pushing for conclusion of a formal deal on the development of the three fields next month, which can start production as early as 2013 with a daily output of 35,000 barrels," the ministry said Thursday.
SOUTH KOREA EYES IRAQ DEAL
To meet the self-sufficiency target, South Korea will also join oil development projects in Iraq and pursue more oil-for-infrastructure deals under which South Korea will offer aid to improve infrastructure in return for stakes in oil/gas fields, the ministry said.
It said that Dana Petroleum, in which state-owned Korea National Oil Corp., has a more than 90% stake, and a consortium comprising SK Innovation and Daewoo International would participate in an auction for Iraqi fields slated for December.
"In a package deal, South Korea will seek to link development of the Middle Euphrates field in Iraq which has 600 million barrels of crude reserves with construction of the Karbala refinery with a capacity of 140,000 b/d," the statement said.
In addition, KNOC will seek to acquire more foreign oil firms, the ministry said.
In 2010, the company acquired UK-based explorer Dana Petroleum for $2.95 billion in a hostile takeover. It also purchased the Canadian oil and gas assets of Dallas-based Hunt Oil for C$525 million.
In 2009, KNOC acquired Canadian oil producer and refiner Harvest Energy Trust for $3.95 billion and a 50% stake in Peru's Petro-Tech, currently known as SAVIAPeru.
"As the series of acquisitions have drastically boosted the self-sufficiency ratio, the government will help KNOC take over more foreign firms," the ministry said.
Driven by the acquisitions, daily production by KNOC and state-run Korea Gas Corp. increased to 198,000 boe in 2010, up from 59,000 boe in 2007, it said. Daily production of private companies in South Korea was 144,000 boe last year, compared with 66,000 boe in 2007.
The ministry said South Korea would intensify its effort to tap unconventional resources such as oil sands and shale gas, largely in Canada, Venezuela and Australia, to boost its energy security.
"The government aims to boost the portion of unconventional resources in the self-sufficiency volumes to 20% by 2030, compared with less than 1% as the end of last year," the statement said.
The government will come up with a blueprint for the development of unconventional resources in the fourth quarter of this year, it said.
South Korea, the world's fifth-largest crude importer and second-biggest LNG buyer, has been trying to ensure stable energy supplies for Asia's fourth-largest economy. The country is vulnerable to rises in prices because it imports almost all of of its crude and natural gas requirements.
