LG International (LGI) is transforming itself. The Korean company has departed from the existing business of mainly offering export services to other companies, and is now expanding its investments in differentiated businesses such as natural resources development and direct and indirect overseas investment.
The overseas natural resources development project conducted by LG International is gaining momentum this year, with the project showing tangible results in the first half of the year.
LG International acquired the shares and operational rights of an oil field in Kazakhstan in 2010. Under the takeover agreement, the Korean trading firm acquired a 40 percent share of and the operational rights of the North West Konys oil field owned from Galaz Energy BV after investing US$24 million.
The NW Konys oil field is located in the north of Kyzylorada, central Kazakhstan, and trial oil production is expected to begin in the latter half of this year. A source from the trading company said, “We plan to produce 1,600 barrels of oil a day at the beginning, and increase production to a maximum 3,800 barrels a day.”
LG International has acquired five oil fields in total, including the ADA oil field, oil fields in Kazakhstan's block 8, Egizkara oil field, and Zhambyl oil field, by taking over the NW Konys oil field.
In particular, the ADA oil field has become the first place where high quality crude oil has been discovered among the oil fields being developed by other domestic companies in Kazakhstan. Among all the oil fields in Kazakhstan being developed by Korean companies, the ADA oil field is making the fastest progress, with trial production of oil beginning in the latter half of last year.
A source from LG International said, “We will improve our ability to carry out overall oil field operations, from oil exploration to oil development and oil production by independently operating the NW Konys oil field, based on the know-how and highly skilled professionals obtained from operating existing businesses, such as the ADA oil field. Through this, LG International will be able to establish itself more firmly as a natural resources trading company.”
Before taking over the NW Konys oil field, LG International said last March that it will begin activities to secure oil fields in Latin America. The Korean company secured a foothold to develop natural resources in Latin America after signing a strategic partnership agreement with GeoPark, a Latin American oil and gas company, and carrying out a joint acquisition of oil fields in Latin America. GeoPark, a petroleum development company based in Buenos Aires, Argentina, is currently involved in six oil exploration and production field projects in Argentina and Chile.
The Korean trading company is expanding its overseas natural resources development beyond Latin America. The company is currently engaged in 20 overseas projects.
LG International began its first project to develop overseas natural resources back in 1983, participating in the development of the Ensham bituminous coal mines in Australia. Until now, the Korean firm has been supplying bituminous coal produced here to home and abroad. Furthermore, LGI became the first foreign company to participate in mine development in Russia in 1994. The trading firm joined the development of Erel bituminous coal mines in the Sakha Republic of Russia, and is now supplying bituminous coal to Korea, Japan, Taiwan, and other countries.
Since then, LG International has expanded its investment in oil and gas fields. The Korean firm is now seeing sales profits and dividend yields after investing in 11-2 gas fields in Vietnam in 1992, Oman’s Bukha gas fields in 1997, and Qatar’s Ras Laffan LNG fields in 1999.