September 16, 2011
SEOUL, S. Korea, — A Korean consortium led by the Korea National Oil Corporation will develop a super-size oil field with an estimated deposit of 1.9 billion barrels of oil and build social infrastructure in Kurdistan autonomous region in Iraq's north. It looks as though Korean businesses will after all take a brisk part in Iraq's postwar reconstruction in the area.
According to the Ministry of Knowledge Economy on Wednesday, Kurdish Regional Government Prime Minister Nechirvan Barzani and a senior executive of the KNOC officially signed a contract on the development of eight oil blocks and the sharing of oil production in Erbil in the northern Iraqi region of Kurdistan.
As a result, the KNOC obtained the right to develop two undeveloped blocks presumed to have oil deposits and to take smaller stakes in six other blocks in Kurdistan. The total estimated deposit in these eight blocks is approximately 7.2 billion barrels,www.ekurd.netof which the KNOC has secured about 1.9 billion, the equivalent of two years' consumption for all of South Korea.
The KNOC said the Kurdish oil blocks are the largest oil fields Korea has ever developed overseas. Test production is to begin in three to four years.
The two sides also signed an agreement for a package deal that includes crude oil development and social infrastructure construction in the Kurdish region.
The SOC consortium will consist of seven Korean construction companies, including Hyundai Engineering and Construction, Ssangyong Engineering and Construction, and Kolon Engineering and Construction. They will build infrastructure worth US$2.1 billion, including electrical works ($700 million) and water supply and sewers ($1.4 billion).
Kurdistan Oil Project Flops
An oil project in Kurdish northern Iraq into which the Korea National Oil Corporation had poured about US$400 million has proved unfeasible.
The project was agreed in February 2008 between then president-elect Lee Myung-bak and Prime Minister Nechirvan Barzani of the autonomous regional government, who was visiting Seoul. The contract was signed in June that year. At that time, the project was touted as success for Lee’s "resource diplomacy.” The KNOC had boasted it secured about 1.9 billion barrels of oil, the equivalent of two years' consumption for all of Korea.
But according to data KNOC gave to Grand National Party lawmaker Lee Hak-jae of the National Assembly Knowledge Economy Committee on Thursday, drilling at five oil fields -- Bazian, Sangaw North, Sangaw South, Qush Tappa, and Hawler Area -- showed that they have nearly no economic value. Some had no oil deposits at all, while deposits at others fell far short of expectations. Still others fields contained either water or a small amount of natural gas instead of crude oil.
KNOC gave $211.4 million to the Kurdistan regional government after the contract was signed and spent another $188.68 million on drilling.
"This is a typical case of failure in overseas resource development caused by a hurry to achieve impressive results, without a proper feasibility study being done first," the lawmaker said. "We need to thoroughly review all overseas resource development projects."
http://www.ekurd.net/mismas/articles/mi ... est735.htm