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South Korea sells Brazilian oil leases
by Staff Writers
Seoul (UPI) Jul 14, 2011

disclaimer: image is for illustration purposes only

South Korea's SK Group, the country's fourth largest conglomerate is preparing to sell three offshore oil field concessions in Brazil for $2.4 billion.

The deal represents a healthy profit for the SK Group, as it is triple the amount the SK Group paid for the concessions in 2000 and 2004.

SK Group Chairman Chey Tae-won's aggressive overseas resource development strategies have paid off very well, JoongAng newspaper reported Thursday.

"This is a time to take another step forward in the market through making the right choices based on our know-how in crude oil development projects," SK Innovation Chief Executive Officer Ku Ja-young saod.

"By securing capital for investment and reorganizing our oil fields, we will continue to grow as a company contributing greatly to the domestic energy needs and the government's plans by effectively leading our oil development projects."

SK Innovation was the first South Korean private sector company to go into overseas crude oil development and is exploring, developing and producing in 26 different locations in 16 countries.

Given South Korea's energy shortages -- it imports more than 83 percent of its energy needs -- South Korean companies have aggressively fanned out worldwide searching for energy assets and are concentrating their efforts on liquefied natural gas. South Korea's Kogas, for example, is the world's largest importer of LNG.

SK Innovation current projects include an LNG facility in Peru that was completed in 2010 as well as LNG projects in Yemen, Oman and Qatar.

SK Innovation's Brazilian unit, which was started 11 years ago to explore regional oil development projects, owns 40 percent of the BM-C-8 currently producing offshore field, 20 percent of the BM-C-30 offshore field currently being prospected and 26.67 percent of the BM-C-32 offshore field, also being explored.

For BM-C-8 SK Group has the right to 11,000 barrels of crude oil per day.

South Korea's Ministry of Knowledge Economy said SK Innovation has almost tripled its investment of $748 million in the three Brazilian fields over the last decade, investing $558 million in the BM-C-8 field in 2000 and in 2004 putting $138 million in the BM-C-30 field and $52 million in the BM-C-32 offshore field.

The South Korean government played a substantial role in SK Group's Brazilian investments by lending the conglomerate $78 million, with the proviso that SK Innovation didn't have to pay back the loans if the projects failed, with the generous terms intended to encourage SK to develop overseas oil assets.

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