October 11, 2005
    Two rivals in Korea's energy market since the 1970s are about to lock horns again, this time in overseas oil development.
Samchully Co. said yesterday that it has decided to participate in the development of an oil field in Yemen, its first such project overseas, as part of a consortium led by the state-run Korea National Oil Corp. The former briquette manufacturer holds 20 percent in the consortium, the second largest stake after Korea National Oil Corp., which has 50 percent. The consortium is currently negotiating with the Yemeni government on a production-sharing agreement, which is expected to be signed next month.
    Samchully said its involvement in overseas oil field development represents its first step in diversifying its businesses.
    At Samchully's 50th anniversary celebration last month, Chairman Yi Man-deuk predicted the company would grow into a global energy concern with annual sales of 3 trillion won ($2.9 billion) by 2010.
    "In order to achieve this goal the company will expand its business from consumer gas sales to overseas resource development and dealing in liquefied natural gas," Mr. Yi said.
    But Samchully has a way to go to catch its longtime rival Daesung Industrial Co., a major affiliate of Daesung Group, which has already been in the oilfield development business for over a decade.
    From its first project in Libya in 1990, Daesung Industrial is now developing oil fields in nine countries and produces oil in Qatar and Libya. "We have already recovered 50 percent of our investment in overseas oilfield development," said Choi Seok-yeon at Daesung Industrial. "Within five years, the company will likely generate more than 10 percent of its annual sales from overseas oil fields."
    Samchully and Daesung share a markedly similar trajectory in the energy business: Having dominated the briquette market in the 1970s, the two companies moved into consumer gas sales in the 1980s, and even closed their briquette factories in the same year, 2002.