Azernews.Az

LG Chem , South Korea's largest chemical company, signed a deal worth at least $4 billion on Thursday to develop a large petrochemical complex in Kazakhstan it says will rival Middle Eastern suppliers, Reuters reported.

LG Chem said it would construct the complex near the western Kazakh city of Atyrau as part of a 50-50 joint venture with Kazakhstan Petrochemical Industries (KPI). Commercial production is scheduled to begin in 2016, the company said in a statement.

The investment was among several contracts signed during a visit by South Korean President Lee Myung-bak to Kazakhstan, the largest of the former Soviet economies of Central Asia.

"A number of documents are being signed today, the most important of which ... will make the Republic of Korea one of the main investors in Kazakhstan," Kazakh President Nursultan Nazarbayev told his South Korean counterpart.

Kazakhstan, which holds 3 percent of the world's recoverable oil reserves, has attracted more than $120 billion in foreign investment since gaining independence two decades ago. Much of its future investment is aimed at processing of raw materials.

The South Korean investment forms the second phase of an even larger project to develop a major petrochemical complex near Atyrau. Chinese company Sinopec Engineering is undertaking construction of the first phase, worth around $2 billion.

LG Chem said its investment with KPI would be worth $4 billion and involve the construction of ethylene and polyethylene plants with annual capacities of 840,000 tonnes and 800,000 tonnes respectively.

"LG Chem has now secured an important overseas production site based on low-cost petrochemical resources, so we are in a strong position to compete with the Middle East in the future," LG Chem quoted Chief Executive Peter Bahnsuk Kim as saying.

The Kazakh government, in materials prepared for reporters for the visit of President Lee, said the joint venture would invest $4.3 billion, of which slightly over $3 billion would be borrowed.

KPI is owned 51 percent by KazMunaiGas Exploration Production , the London-traded unit of state oil and gas company KazMunaiGas . Privately owned industrial group SAT & Co owns the remaining 49 percent of KPI.

The Kazakh and South Korean governments also signed an agreement to develop and finance construction of a thermal power station in Balkhash, an industrial city about 600 km (375 miles) north of Kazakhstan's biggest city, Almaty.

Kazakh state-run company Samruk-Energo signed a framework agreement in 2009 with a South Korean consortium comprising Korea Electric Power Corp (KEPCO) and Samsung C&T to develop the $4.5 billion Balkhash power project.