A second South Korean consortium has struck an oil deal with Iraq’s Kurdish region, risking a sharp reaction from Baghdad but boosting shares in Ssangyong Engineering & Construction, which will lead a linked $12 billion construction program.
The Iraqi government last month halted oil exports to South Korea’s top refiner SK Energy and Austria’s OMV AG in response, to what it says are illegal oil exploration deals with the Kurdish regional government. Korea National Oil Corp (KNOC) said a consortium it is leading has secured rights to explore an oil field in Kurdistan in exchange for a construction project by South Korea’s builders. KNOC led another consortium including SK Energy, which secured exploration rights from the Kurdish regional government for the Bazian oilfield, triggering Baghdad’s export halt. Shares in Ssangyong jumped nearly 15% to 21,000 won by 0245 GMT, leading the Kosdaq’s 1.7% rise. The company said building projects include a 2 trillion won ($2.1 billion) highway program and 10 trillion won ($10.5 billion) for waterworks, petrochemical plants and hospitals. It did not specify a timeframe or say how much would be paid to the builders’ consortium.
KNOC said the deal would help South Korea, which is almost wholly reliant on crude oil imports, secure foreign energy resources while paving the way for construction companies to win more orders in Iraq. Korean daily newspaper Dong-a Ilbo said the oil field, whose location was not identified, was estimated to hold 800 million to 1 billion barrels of oil. South Korea is investing in overseas exploration projects as well as buying assets or companies that are already producing oil. Iraq accounted for about 4% South Korea’s total crude imports last year. (Arabian Business)