JAPAN, SOUTH KOREA AND OIL

JAPAN, S.KOREA STEP UP GAME IN FIGHT FOR RESOURCES

Chikako Mogi and Cho Mee-young

Reuters, July 9, 2010

Japanese and South Korean firms, backed increasingly by the state, are stepping up their game in the dash for global resources in which they face fierce competition from China.

For resource-poor Japan and South Korea, China with its tremendous purchasing power is a formidable opponent -- in June China secured more than $8.8 billion worth of commercial and mining deals with Australia.

Still, analysts say the tide may be turning for Japan and South Korea because of increased state funding, more state and private sector partnerships and in Japan's case, a change in the law to encourage firms to seek resources abroad.

There are some positive signs for South Korea and Japan:

Korea National Oil Corp (KNOC), armed with a $6.5 billion war chest, is mulling a cash offer for Britain's Dana Petroleum as part of a move aimed at doubling national oil reserves, while state-backed Japan Bank for International Cooperation (JBIC) recently signed an agreement of cooperation with Vietnam's state oil group.

"Three winning factors in global bidding for resources are money, relationship with the government there, and technologies," says Korea Investment & Securities analyst Ki-yong Park.

"State-run (South Korean) companies, SK Energy and POSCO have advantages in those factors."

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