Daewoo International Corp., Korea's largest general trading company, will establish a 50:50 joint venture with Bellatrix Exploration, a Calgary (Canada)-based company specializing in oil exploration and production, for shale gas development. According to investment banking sources on July 16, the POSCO group company will invest US$36 million to jointly develop extensive Cardium land holdings in west-central Alberta.
For the first seven years, Daewoo International will receive 33 percent of operating profit. The agreement included a provision that Bellatrix would make up for losses if the annual return is below 8 percent. After the first seven years, Daewoo will be entitled to 20 percent of the operating profit from shale gas development.
This is not the first time Korean companies have invested in Canadian oil and gas assets. Last year, TransCanada Corp. formed a partnership with Korea Gas Corp., Mitsubishi Corp., and PetroChina Co. to build a $4-billion pipeline from northeastern British Columbia to an LNG terminal at Kitimat.