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S. Korea's public energy firms move to terminate overseas projects

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(Globalpost/GlobalPost)

SEOUL, June 24 (Yonhap) -- The country's public energy firms are beginning to pull out of overseas development projects, officials said Monday, amid an apparent government move to interrupt projects that are deemed to be failing.

The Korea National Oil Corp. (KNOC) has already decided to terminate its oil exploration project in Uzbekistan following the end of its second-phase investigation in August.

The state-run oil company has also decided to sell all its 42.5 percent stake in an oil field in Kazakhstan's South Karpovsky or terminate the project altogether if it is unable to find a buyer, according to KNOC officials.

Such a move comes shortly after the government said it was checking the feasibility of overseas projects by public energy firms, which were earlier blamed by Vice Energy Minister Han Jin-hyun as a source of public firms' growing debts.

"Public energy firms have been actively expanding into the area of overseas resources development, but the problem is that their debt ratio is growing too high," Han had said in a meeting with reporters last month.

The Ministry of Trade, Industry and Energy said last week that a special task force has already held three rounds of meetings to review overseas energy development projects by public firms here.

The KNOC officials, however, said the company's decision to terminate its two projects in Uzbekistan and Kazakhstan were not influenced by the government's move, noting the company had already decided to sell its 42.5-percent stake in the Karpovsky mines in 2012.

"The issue was again brought up at a board of directors' meeting this month, which decided to terminate the Karpovsky project if there is no suitable buyer," said Kim Myung-hoon, the KNOC vice president in charge of public relations.

Still, the government review is apparently affecting similar decisions by many other public firms to pull out of projects.

The Korea Gas Corp. has returned or plans to return its business licenses for offshore exploration projects in East Timor, in which it has invested nearly US$32 million since 2006, company officials said.

The Korea Southern Power Co., a subsidiary of the state-run Korea Electric Power Corp., has also recently decided to terminate its project to produce wood pellet fuel in Canada.

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