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KNOC Suffers 270 Bil. Won Loss from Kazakhstan Oil Project

KNOC

Korea National Oil Corp. (KNOC) decided to sell its stake in Kazakhstan’s Zhambyl oil block for $5 million, despite its investment of $250 million starting from 2008.

During the Lee Myung-bak administration, this project was touted as one of successful overseas resource development projects.

However, KNOC gave up the project after making a loss of $245 million over the past eight years.

Although there are some who complain that the state-run company wasted the taxpayers’ precious money by failing to thoroughly review the feasibility of the project, others point out that KNOC is selling its stake at a bargain price due to the increasing pressure from the current administration to withdraw from the project.

According to government and industry sources on August 4, KNOC recently held a board of directors’meeting and decided to sell its stake in the Zhambyl oil block to Kazakhstan’s state-run oil company KMG. The sales price is tentatively set at $5 million.

KNOC acquired a 27 percent s take in the Zhambyl oil bock for $85 million from KMG in 2008 and made an additional investment of $165 million in the project.

KNOC officials said, “We are near agreement with the Kazakhstan government over the disposal of our stake in the Zhambyl oil block.”

The Original Posted by beje@hankyung.com

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