SEOUL - State-run Korea National Oil Corp (KNOC) said on Tuesday it has started an oil exploration project in Iraq on its own, after failing to attract consortium members for the $2.1 billion deal.
Under the deal, KNOC will operate two oil fields -- Qush Tappa and Sangaw South -- and own stakes of 15 to 20 percent in six fields including the Bazian block in the Kurdish region, which is the only block to be run in a consortium, which includes South Korea's top refiner SK Energy (096770.KS).
In return, KNOC will provide $2.1 billion worth of infrastructure in the Kurdish region including power facilities, water services, sewage systems and other infrastructure.
KNOC has been struggling to reach an agreement with domestic builders, including Hyundai Engineering & Construction (000720.KS) and Doosan Construction (011160.KS), over how to balance the financing of the infrastructure project.
The firms would be paid back by the Kurdish government for the projects, and receive additional payments from profits made from the blocks. But political wrangling between the Iraqi government and the Kurdish regional government dimmed prospects of making profits from the oil blocks.
KNOC will soon announce plans to initiate a $600 million operation, the first phase of the infrastructure project. It will offer another $1.5 billion once the prospects for crude exports from the region are clear.
The eight blocks -- five located near Irbil and three others near Sulaymaniyah -- have estimated oil reserves of 7.2 billion barrels, of which Korean firms will have the rights to 1.9 billion barrels.
Under the deal, KNOC will operate two oil fields -- Qush Tappa and Sangaw South -- and own stakes of 15 to 20 percent in six fields including the Bazian block in the Kurdish region, which is the only block to be run in a consortium, which includes South Korea's top refiner SK Energy (096770.KS).
In return, KNOC will provide $2.1 billion worth of infrastructure in the Kurdish region including power facilities, water services, sewage systems and other infrastructure.
KNOC has been struggling to reach an agreement with domestic builders, including Hyundai Engineering & Construction (000720.KS) and Doosan Construction (011160.KS), over how to balance the financing of the infrastructure project.
The firms would be paid back by the Kurdish government for the projects, and receive additional payments from profits made from the blocks. But political wrangling between the Iraqi government and the Kurdish regional government dimmed prospects of making profits from the oil blocks.
KNOC will soon announce plans to initiate a $600 million operation, the first phase of the infrastructure project. It will offer another $1.5 billion once the prospects for crude exports from the region are clear.
The eight blocks -- five located near Irbil and three others near Sulaymaniyah -- have estimated oil reserves of 7.2 billion barrels, of which Korean firms will have the rights to 1.9 billion barrels.
