South Korea, Asia’s fourth-largest buyer of crude, signed its first oil-field contract with the United Arab Emirates, helping to assure future supplies for a nation dependent on imports for most of its energy needs.
Starting in 2014, state-run Korea National Oil Corp. will be included in ventures formed by Abu Dhabi National Oil Co. to develop fields with reserves of more than 1 billion barrels of oil worth 110 trillion won ($97 billion) under terms of a preliminary agreement signed yesterday, South Korea’s presidential office said in an e-mailed statement.
The agreement came during South Korean President Lee Myung Bak’s visit to the U.A.E., his first trip there since December 2009 when state-run Korea Electric Power Corp. beat General Electric Co. and Areva SA to win the Gulf Arab nation’s first nuclear power plant contract.
Korea National, or KNOC, joins international oil companies such as Exxon Mobil Corp. and Royal Dutch Shell Plc in developing fields in the U.A.E., the fourth-largest crude producer in the Organization of Petroleum Exporting Countries.
The deal will help raise South Korea’s output from its stakes in overseas fields to 15 percent of the nation’s energy needs, from the current 11 percent, the statement said.
Anyang, South Korea-based KNOC will be allowed to join development projects in Abu Dhabi when current contracts that expire starting in 2014 are renewed. Details including which fields the South Korean company will join will be discussed later, the statement said.
South Korea was also given rights to exploit Abu Dhabi’s three undeveloped blocks, which initial estimates show have reserves of 570 million barrels of oil. The countries will sign a contract on that within the year, and those fields may start production as early as 2013 with a daily output of 35,000 barrels.
South Korea will to help store 6 million barrels of crude oil free-of-charge for Abu Dhabi, a reserve the Asian country can tap to meet emergency needs, the statement said.
South Korea and the U.A.E. agreed to closely cooperate in building “the best quality” nuclear reactors, according to a separate statement after the summit between President Lee and his counterpart Sheikh Khalifa bin Zayed Al Nahyan amid concerns over safety of nuclear power as Japan struggles with reactors crippled by an earthquake and tsunami.
President Lee will attend the ground breaking ceremony today for the U.A.E.’s first nuclear power plant at the proposed Braka site.
The U.A.E. is the second-largest supplier of oil to South Korea. Two-way trade totaled $17.6 billion in 2010, according to the presidential office.