KNOC eyes $2-3 billion in oil assets by 2012

By Miyoung Kim and Cho Mee-young

SEOUL (BestGrowthStock) – State-run Korea National Oil Corp (KNOC) plans to spend between $2 billion and $3 billion to add 100,000 barrels per day (bpd) of crude production capacity by 2012, and is looking at 5-6 oil assets, a top executive said.

KNOC (KOILC.UL: ), which recently completed the $2.6 billion acquisition of British-based Dana Petroleum — its biggest acquisition and the first overseas hostile takeover by an Asian state-owned company — said it was not looking at London-listed Premier Oil Plc (PMO.L: ) and that future acquisitions would focus on assets, rather than corporate deals.

“There’s no shortage of investment targets and we are receiving about 20 to 30 acquisition proposals from investment banks every month,” Senior Executive Vice-President Kim Seong-hoon told Reuters in an interview on Friday.

“We’ve narrowed them down to five or six and are focusing on assets with high upside potential and little investment risk,” said Kim, who is also serving as board chairman.

In November, shares of Britain-based Premier Oil, which has assets in the North Sea, Congo, Indonesia, Pakistan and Vietnam, hit a year-high after a newspaper reported that the company had received a bid approach from KNOC.

“We are no longer looking at corporate acquisitions. Recent acquisitions have brought us a skillful workforce and sufficient technology to look at asset-based acquisitions,” Kim said.

Kim, who has spent almost 30 years with KNOC, said the company was on track to achieve 300,000 bpd by 2012 and planned to lift the target to 500,000 bpd by 2018 and to 1 million bpd by 2030, raising South Korea’s oil self-sufficiency to 40 percent from 10 percent now.

Following the acquisition of Dana, KNOC’s daily production had risen to 185,000 bpd and would reach 200,000 bpd in January or February, Kim said.

NOT COMPETING WITH CHINA

The South Korean government has given KNOC a $6.5 billion war chest this year to compete with other energy-hungry Asian state companies, racing to secure supplies and reduce the dependence of Asia’s No.4 economy on imported oil.

The acquisition of Dana also helped KNOC address the perception that is a timid buyer, after its failure to conclude other deals in recent years.

Companies from China and elsewhere have so far outgunned KNOC, which is involved in oil exploration and storage, in bigger M&A deals.

China’s largest oil refiner China Petroleum & Chemical Corp (Sinopec) (600028.SS: )(0386.HK: )(SNP.N: ) outbid KNOC for London-listed Addax Petroleum in 2009 and Italian group ENI (ENI.MI: ) trumped KNOC to snap up Britain-based Burren Energy in 2007.

“We are not in direct competition with China for acquisitions. There are more than enough targets and we are looking at assets in exploration and development, including oil fields and shale,” said Kim, who has overseen KNOC’s self-sufficiency more than doubling to 10 percent in two years.

KNOC, which had spent about $3.2 billion this year, was also working with state wealth fund Korea Investment Corp and National Pension Service to acquire foreign oil assets, Kim said.

South Korea expects energy consumption to rise by 3.5 percent annually, as economic growth remains resilient.

The Bank of Korea on Friday said the Korean economy was expected to grow 4.5 percent next year, from an estimated 6.1 percent this year.

(Editing by Chris Lewis)

KNOC eyes $2-3 billion in oil assets by 2012