South Korea, U.A.E. to Cooperate on Energy Exploration, Stockpiling of Oil
South Korea and the United Arab Emirates agreed to cooperate on energy exploration and stockpiling of crude oil, deepening ties after the Asian nation won a $20 billion contract to build nuclear plants in Abu Dhabi.
State-run Korea National Oil Corp. and Abu Dhabi National Oil Co. signed a preliminary agreement today at the headquarters of Anyang, South Korea-based KNOC, South Korea’s Ministry of Knowledge Economy said today. They will form a team to study the possibility of exploring for oil and gas in Abu Dhabi and will discuss a plan for Abu Dhabi National to use storage facilities owned by KNOC, the ministry said in a statement.
KNOC is joining international oil companies such as Exxon Mobil Corp. and Royal Dutch Shell Plc that have traditionally been present in the country, the fourth-largest crude producer in the Organization of Petroleum Exporting Countries. South Korea and the U.A.E. are expanding economic cooperation after state-controlled Korea Electric Power Corp. beat General Electric Co. and Areva SA to win the emirate’s first nuclear power plant contract in December.
“South Korea isn’t in the ‘Abu Dhabi club’ of companies such as Exxon and Shell that have big oil concessions and have traditionally won new contracts,” Thaddeus Malesa, a Dubai- based analyst at PFC Energy, said. “The Koreans are going to have a much larger presence in the U.A.E., in energy and also in manufacturing, which is a direct result of the nuclear deal.”
Abu Dhabi, holder of most of the U.A.E.’s hydrocarbon reserves, will be reviewing contracts for concessions held by foreign oil companies which are due for renewal within the next five years. It plans to boost oil output capacity to 3.5 million barrels a day, from about 2.8 million.
Crude-Oil Storage
The Persian Gulf nation is in talks with South Korea to use about 10 million barrels of crude-oil storage capacity, JoongAng Ilbo newspaper reported in May. The U.A.E. exported 96 percent of its oil to Asia and the Pacific last year, according to OPEC’s Annual Statistical Bulletin.
South Korea has 146 million barrels of oil storage capacity, enough to meet the nation’s consumption for 158 days, according to the ministry. The nation, which imports almost all of its energy requirements, has spent 2.46 trillion won ($2.1 billion) building oil-reserve facilities since 1980 after experiencing fuel shortages during the 1970s oil crisis.
South Korean companies have increased their presence in the U.A.E. this year. Korea Electric awarded construction contracts to build four nuclear plants in the emirate by 2020 to companies including Hyundai Engineering & Construction Co. and Samsung C&T Corp., while Samsung Engineering Co. won a contract for $1.5 billion to provide utilities for Abu Dhabi’s sour gas project.
To contact the reporters on this story: Shinhye Kang in Seoul at skang24@bloomberg.net; Ayesha Daya in Dubai at adaya1@bloomberg.net
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