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South Korea seeks overseas oil fields

South Korea, which imports almost all the petroleum it needs, produced 22 percent more oil from its overseas projects in the first half as new fields came on stream and companies increased investments.

Asia's third-biggest economy produced 21.2 million barrels of oil equivalent in the first six months of the year, the Ministry of Commerce, Industry and Energy said yesterday in an e-mailed statement.

State-run Korea National Oil Corp and SK Energy Co, the country's biggest oil refiner, are boosting investments in overseas projects as competition for supplies with China and India intensifies amid rising oil prices. The country, which sources 82 percent of its crude oil from the Middle East, plans to spend US$11 billion on overseas fields in the next decade.

"Encouraged by the government's various incentives, more companies are looking into the high-risk, high-return business," said Lee Kwang-hoon, an oil and chemicals analyst with Good Morning Shinhan Securities Co in Seoul. "It will help oil refining companies diversify their supply sources away from the geopolitically risky Middle East."

Seoul wants 28 percent of the country's oil and gas imports to be sourced from South Korean-owned fields by 2016, up from 3.2 percent last year, the ministry said in August.

A gas field in Vietnam has begun production and existing fields in countries including Qatar and Peru increased output, it said yesterday.

"Sky-rocketing oil prices helped create a boom to invest in oil and gas projects abroad, leading to increasing investment activities by domestic companies," the statement said.

Crude oil futures in New York have gained 35 percent in a year and reached a record US$83.90 a barrel on Sept. 20, the highest since the contract was introduced in 1983.

South Korea invested US$1.3 billion in overseas oil and gas projects in the first six months of this year as more companies joined the effort to boost energy reserves, it said. The country's companies are engaged in 96 projects in 30 countries.

With more fields due to begin production this year, the government expects to source 4 percent of its oil and gas supplies from projects in which it has stakes by the end of this year, it said.
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