Korea National Oil puts Canada on its radar

Korea National Oil Corp. (KNOC), sitting on a multi-billion-dollar warchest, is setting its sights on Canada as the state-owned company aims to ramp up production and catch up to Asian rivals.

Seoul said this month that cashed-up KNOC will spend $6.5-billion (U.S.) on M&A in 2010 in an effort to cut South Korea’s almost total dependence on imported oil. That goal will put the company in direct competition with Asian energy giants such as PetroChina, Malaysia’s Petronas, and India’s ONGC.

KNOC may be eyeing assets offered by such Canadian companies as its top oil firm Suncor Energy (SU-T) , No.2 independent petroleum producer EnCana Corp. (ECA-T) and No.3 independent oil explorer Talisman Energy (TLM-T) , UBS said in a recent report.

In addition, Canadian oil sands company Opti Canada (OPT-C) and its peer Nexen Inc. (NXY-T) are seen as potential acquisition targets. Their shares moved up as recently as late last year on speculation of bids from Chinese energy giants. So far, no public offers have emerged.