Korea National Oil Corp. (KNOC) for the first time in its history brought into Korea 2 million barrels of oil pumped at its overseas oil fields including 300,000 barrels of forties oil drilled by Dana Petroleum to deliver them to GS Caltex, the state-owned oil company said on Dec. 12 last year.
Forties oil is one of the representative crude oils produced at North Sea oil fields that is comparable to Middle East oil in quality and if economically feasible, the oil could replace some of the oil imported from the Middle East by oil refiners in Korea, the oil company said.
The shipment of oil was the first direct case into Korea from overseas oil wells drilled by a Korean oil company, confirming the progress made by Korean oil exploration firms. That oil can be shipped into the country under emergencies. Its significance is also that in the case of emergencies such as a war in oil producing nations or regions, KNOC can bring its oil into the country under an emergency oil supply system and diversify oil imports that are currently heavily dependent on the Middle East.
The crude oil was loaded into tankers in Britain starting in mid October last year and shipped to Korea, arriving after an average of 50 days in Yeosu, South Jeolla Province, where GS Caltex oil refineries are located.
KNOC took over 100 percent of Dana Petroleum’s stake on Oct. 9, 2010 and has been selling the crude oil stored by Dana from 2012 to build a base for direct oil shipment to Korea, the company said.
The direct shipment of oil from the oil fields run by KNOC has been delayed so far due to regulations and prices in host countries. Thus, KNOC has been watching the international oil market trends cautiously and talked with the British oil authorities when international oil prices appeared good and finally was able to secure the right quantities of oil to ship directly to Korea.
Through the deal with a North Sea oil producer, KNOC has been able to build a base to reduce the imports of Middle East oil by taking advantage of the Korea-EU free trade agreement, which includes the provision that the EU will support Korea to diversify its oil import sources.
KNOC is determined to import oil from regions other than the Middle East when the international oil market situation and economic feasibility allow it to. The company believes that the possibility to reduce dependence on non-Middle East oil will grow when it finds oil in its wells in Iraq and the UAE through trading for non-Middle East oil.
In the meantime, KNOC discovered oil at Demir Dagh-2 of the Hewler Mining Block in the Kurdish autonomous region in Iraq during the first exploration in July, pumping up 10,000 barrels of crude oil daily from the three lower depths of the mining block, the state-owned oil company said recently. The oil company now plans to widen the drilling area to produce more crude oil.
KNOC officials said pumping up 10,000 barrels daily from the new oil field being test-drilled is significant because it indicates bigger oil deposits. The company will soon know the accurate quantity of oil deposits through more test drilling at the site.
The partners engaged in the test drilling of the Hewler District, covering the Kurdish Autonomous Government’s capital Irbil with a total area of as much as 1,532 square kilometers, include the Kurdish government with a 20 percent stake, Orix Oil Company of Switzerland with 65 percent, and KNOC with 15 percent. KNOC is engaged in oil drilling in three oil blocks in Iraq with the two others being the Bajan and Sangausaus.
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