S. Korea to Buy 27 Percent of Kazakhstan's Caspian Oil Project

A South Korean group led by Korea National Oil Corp. will buy 27 percent of a crude-oil project Kazakhstan is developing in the Caspian Sea, an official at the government-controlled explorer said.

The Korean group, including SK Corp., South Korea's largest oil refiner, will sign a contract April 22, Bae Ho Joon, a spokesman for Anyang-based Korea National Oil, said by telephone today.

``We expect a final conclusive contract sometime in the third quarter,'' Bae said. He declined to comment on financial terms of the contract, including a price for the stake.

South Korea, the world's fourth-largest oil buyer, relies wholly on imports for its crude oil needs. State-run Korea National Oil is involved in 17 oil projects in 10 countries, including Yemen, Indonesia and Vietnam.

The Korean group signed agreements in February with ZAO NK KazMunaiGaz, Kazakhstan's state-run oil company, to jointly develop a crude-oil project in the Zhambyl field in the Caspian Sea. The Korean companies also signed an initial agreement in September to buy a stake in an oil and natural gas development project named ``Tenge'' in southern Kazakhstan.

``The Korean group also has an option to raise their stake in Zhambyl to 50 percent according to the result of the drilling,'' Bae said.

The agreements follow South Korean President Roh Moo Hyun's official visit to Kazakhstan and Russia in September.

``Through the agreements, Korea will be able to join new overseas oil projects that can supply the country as much as 800 million barrels of crude oil,'' Korea's energy ministry said in September.

Korea National Oil owns 35 percent of the Korean group, while SK has 25 percent. Other members of the group include LG International Corp. (001120), Samsung Corp. and Daesung Industrial Co.

To contact the reporter on this story: In-soo Nam in Seoul at inam@bloomberg.net.

To contact the editor responsible for this story: Reinie Booysen at rbooysen@bloomberg.net.

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