According to industry sources, Samchully recently decided to sell all of its shares in the North Star Offshore Oil Field Development Project it participated in seven years ago with the Korea National Oil Corporation (KNOC).
In the project in the Gulf of Mexico, Ankor Energy, a subsidiary of the KNOC, currently has a shareholding of 67% and the rest is owned by private-sector companies such as Samchully. The total investment is US$110 million and Samchully’s shares account for 15%. Given the South Korean government’s success repayable loan, Samchully’s actual losses are estimated at approximately half of its investment.
The North Star Offshore Oil Field Development Project is likely to become another failure of overseas resources development by South Korean companies. It is said that the other private-sector companies are planning to dispose of their shares as well. Still, the KNOC is saying the project is going well and it is going to make an additional investment for more crude oil production.
The offshore oil field did produce crude oil last year. However, the output has rapidly declined since 2014. Back in 2011, when the KNOC acquired the oil field, the corporation said its reserve was 10.8 million barrels. Nevertheless, the output stood at 3.9 million barrels until 2014 and has plummeted since then. It was less than one million barrels in 2016, 620,000 barrels in 2017, and only 50,000 barrels in January this year.
According to many in the industry, the North Star Offshore Oil Field is not that valuable. These days, global oil majors are looking to acquire and increase their shares in oil fields with the international oil price rising. Nonetheless, few companies are interested in the North Star Offshore Oil Field.
The Original Posted by Jung Min-hee/Business Korea