A South Korean energy developer said Wednesday that it has obtained approval
from Jordan to negotiate a deal for the development of a massive oil field in
the western part of the Middle Eastern country.
The Jordanian Cabinet
approved a memorandum of understanding (MOU) on negotiations for a final
agreement Tuesday to explore the field with an estimated reserve of more than
1.1 billion barrels, said Park Cheong-sig, president and CEO of Korea Global
Energy Corp. (KGEC). A signing ceremony will soon be held.
Under the
MOU, both sides will have up to four months to conclude their negotiations for a
production sharing agreement (PSA), which will entitle the South Korean company
to 32.7 percent of total output from the oil field.
"Negotiations for
the PSA will likely be concluded at an early date as most details for the
agreement have already been discussed during our negotiations for the MOU," Park
told Yonhap News Agency.
Under the proposed PSA, KGEC will have to
drill three exploration holes within the next four years, but Park said the oil
field could begin commercial production as early as 2014.
The
agreement, if signed under currently proposed terms, will give the South Korean
company 32.7 percent of total production at the field, which could translate
into 376 million barrels out of the 1.15 billion barrels in probable reserves,
he said.
The proposed project covers about 6,819 square kilometers of
land at the Dead Sea and Wadi Araba Block, which according to Park, has a
"probable" or more commonly referred to as P2 oil reserve of 1.15 billion
barrels, earlier discovered by a U.S. firm.
The U.S. firm, Park said,
claims the area could hold up to 7 billion barrels of oil in P3 or estimated
reserves, and was planning to begin commercial production next year before its
relations with the Jordanian government went sour.
KGEC, upon signing
the proposed PSA with Jordan's National Resources Authority, will replace the
American firm as the sole developer of the field in the southern basin of the
Dead Sea.
The reserve, if confirmed, will mark the largest find in the
Middle Eastern country where the existence of any large commercial oil deposit
is often subject to heated debates.
An official from South Korea's
presidential office Cheong Wa Dae said such a find was still possible.
"It is true that Jordan is located near large oil producing countries, such as
Saudi Arabia, Iraq and Iran," the official said earlier, while speaking on
condition of anonymity.
"Israel, which is also nearby, recently
announced its discovery of a large gas mine, so there is no guarantee that there
is no oil in these countries," he added.