State-owned Korea National Oil Corp (KNOC) is in talks with the Kazakhstan government to pull out of an oil field project due to disappointing exploration results, a KNOC spokesman said on Friday.
KNOC heads a Korean consortium which holds 27 per cent of Kazakhstan’s Zhambyl oil block on the coast of the Caspian Sea. The group has invested a total of about $250 million on acquiring the stake and exploration since 2008.
“After discovering less oil reserves than expected, we are in discussions with our Kazakhstan counterpart to drop out of the oil field project,” the spokesman said.
KNOC is currently waiting for approval from Kazakhstan’s government to finalise its pullout, he added.
According to its website, KNOC and its Korean consortium owns a 27 percent stake in the Zhambyl block, with the remainder owned by Kazakhstan’s national oil company KazMyunayGas (KMG). KNOC holds a 9.45 percent interest in the joint operation for the oil field.
KNOC’s spokesman said the consortium would abandon its stake if the talks were finalised, having intially acquired it for $85 million.
Korea, Asia’s fourth-largest economy, imports almost all of its oil and gas and has engaged in overseas exploration and production projects since 2008 in a bid to secure its fuel needs.
In recent years, the country’s state-run energy firms have been come under pressure over loss making overseas assets, prompting them to sell some of their overseas projects as part of a broad debt-cutting and restructuring plan.