Korean National Oil Company (KNOC) will buy 20 percent in Azerbaijan's undeveloped INAM oil project from Royal Dutch Shell, stepping up its push in the Caspian Sea, the Azeri energy minister said on Tuesday.

Industry and Energy Minister Natik Aliyev told reporters the project in the Caspian Sea would remain under the leadership of BP, which has 25 percent, while Shell would reduce its stake to 5 percent from 25 percent.

Azeri state oil company SOCAR would continue to own a 50 percent stake.

KNOC is experienced in oil production, has modern technologies. For us it is a friendly company, Aliyev said.

The deal has yet to be approved by SOCAR, BP and the Azeri government, which should not be a problem, he added.

He declined to disclose price details.

Inam will be South Korean state-run KNOC's first project in Azerbaijan, a country that is gradually becoming a major player on the Mediterranean oil market as it pushes its Baku-Ceyhan pipeline to Turkey up to planned capacity of 1.2 million barrels per day.

In the Caspian Sea area, KNOC also has stakes in an oil and a gas fields in Kazakhstan and a gas field in Uzbekistan.

SOCAR, BP and Shell signed a $4 billion production sharing deal on INAM in 1998, estimating then that the deposit contained 100 million tonnes (more than 730 million barrels) of oil.

INAM is now estimated to hold about 2 billion barrels of probable oil reserves. Earlier this year, BP said it may begin drilling a second exploratory well at the INAM block in the third quarter.

BP drilled the first exploratory well in 2000-2001, but stopped 1,000 metres short of the required depth of 5,025 metres because of technical problems.