The state-run Korea National Oil Corp. has decided to give up on an oil field development project in Iraq after years of investment, due to low profitability, the company said Tuesday.
The Korean state firm will pull out of the Sangaw South oil field project in the Kurdish region of Iraq. It has injected about $204 million into the project for eight years.
“Members of the board have decided to shut down the oil project in Iraq, as they realized that it holds little profitability after running a feasibility study,” the company said in a statement.
The KNOC purchased 50 percent of the operation rights of the 354-square-kilometer oil field in 2008. Besides KNOC, Daesung Industrial Co., holds 10 percent of the operation rights and the Kurd autonomous government has 20 percent.
Expectations were high when the company started the drilling process in 2014. The oil field was expected to produce 2,105 barrels of oil per day at that time. But it was later found to lack profitability after comprehensive assessments.
The Korean government has been active in overseas exploration and production projects, especially since the former Lee Myung-bak administration.
Korean state-run energy companies, however, have recently been under pressure over lack of profitability, drawing public calls for the withdrawal from projects as part of debt-cutting and restructuring plans.
Earlier this month, the KNOC said it would drop out of an oil project in Kazakhstan, citing lower oil production than expected. The Korea consortium injected about $250 million in the project from 2008.
By Lee Hyun-jeong (email@example.com