South Korea signs MoU with Brazil

South Korea and Brazil signed a memorandum of understanding that could present oil- and gas-related business opportunities to South Korean companies, the country's energy ministry said.
Under the deal signed in Sao Paulo, Brazil's state oil company Petrobras will give South Korean first priority in placing orders for petroleum facilities and oil drillships, the ministry said.

Petrobras, the world's sixth largest oil company, plans to invest $ 112.4 bn over the next five years to expand its business ventures.
South Korean energy officials and business leaders were accompanying President Lee Myung-Bak on a visit to the energy-rich South American region aimed at seeking out opportunities for oil and gas field development and securing stable energy supplies, the ministry said. South Korea is seeking to diversify the sources of its oil beyond the Middle East, which currently supplies 80 % of its crude requirements.

South Korea's top refiner SK Energy is spearheading the country's initiatives in South America. In 2000 it purchased a 40 % stake in the BMC-8 block in Brazil and has been gaining 7,000 barrel a day since July last year. US-based Devon Energy holds the remaining 60 % stake in the block, which is estimated to hold 56 mm barrels of crude oil.
SK Energy also has a 20 % stake in a consortium that discovered crude reserves in October in the BMC-30 block in the Campos Basin, off Brazil, with Anadarko Petroleum (30 %), Devon Energy (25 %) and Canadian natural gas producer EnCana (25 %).

The crude volume has yet to be estimated, but SK Energy said it sees a high possibility of the block holding commercially viable reserves, noting a nearby block is pumping 18,000 bpd in test production.
"It is a result of our four-year-long efforts to develop oil there since a 2004 exploration contract," a company official said. The refiner is also pushing for oil development at the nearby BMC-32 block.

SK Energy Chairman Chey Tae-Won plans to visit Peru later to expand business ventures there. When he met Peruvian President Alan Garcia in October last year, he proposed joining forces on a $ 2 bn petrochemical project in Peru.
"We hope to expand our petrochemical business in South America with Peru as the hub," the company official said. The refiner is currently involved in four oil and gas blocks in Peru, including the 56 block that commenced oil production in September.

SK Energy has won the right for a 100 % interest in Peruvian offshore block Z-46 in an international bid for 19 oil fields by Peru's oil licensing company Perupetro. It has also a 20 % stake in a Peru LNG project that plans to build a liquefaction facility by 2010 and sell 4.45 mm tpy of LNG.
The company has invested more than $ 1 bn in Peru over the past ten years.

South Korea's second largest refiner, GS Caltex, is also seeking to expand its exports of oil products to South America. It is investing won 3 tn ($ 2.1 bn) to build its third Heavy Oil Upgrading facility with a capacity of 113,000 bpd by end-2010 to boost its exports of value-added light oils of diesel, gasoline and kerosene.
The South Korean government has decided to focus its oil development efforts on South America, Russia, Central Asia and Africa in a bid to diversify the country's oil supply sources, and is supporting companies investing in those regions.