News Column

South Korea Expected to Join Oil Project

Nov. 21, 2012

Yonhap news agency

Oil Tanker

South Korea is seeking to sign a contract with the United Arab Emirates next year to take part in a massive oil field development project, a first step to realize a deal guaranteeing Seoul's right to at least 1 billion barrels of UAE crude, officials said Wednesday [21 November].

Last year, the two countries signed a memorandum of understanding that entitles South Korean firms to secure at least 1 billion barrels of crude from existing oil fields in the Middle Eastern nation. The agreement also gave South Korea a separate right to develop three undeveloped fields.

On Wednesday, officials from the government and the state-run Korea National Oil Corp. (KNOC) briefed President Lee Myung-bak that a KNOC-led consortium is pushing to sign a contract next year with Abu Dhabi National Oil Company (ADNOC) to take part in developing a huge onshore oil field.

The field is estimated to hold 371 million barrels of oil, and its daily production amounts to 1.37 million barrels. The existing contract to develop the field expires next year, and South Korea is trying to gain a share when the contract is renewed, officials said.

In July, KNOC submitted documents for a preliminary qualification review, officials said.

Separately in March, a South Korean consortium led by KNOC also signed a contract with the Abu Dhabi National Oil Co. to jointly develop three untapped oil fields in the UAE, which are expected to yield up to 43,000 barrels of oil per day.

KNOC President Suh Moon-kyu reported to Lee that production from the fields could begin in 2014.

Lee, who arrived in Abu Dhabi on Tuesday night, is scheduled to discuss the oil development and other cooperation projects in summit talks with UAE President Sheikh Khalifa Bin Zayed Al Nahyan later Wednesday.

Lee also plans to attend the groundbreaking ceremony for two nuclear reactors, the Barakah nuclear power plant units 1 and 2, to be built by South Korean firms. Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed Al Nahyan will also attend the ceremony.

After the summit, the two sides plan to sign a main contract on a joint project to stockpile 6 million barrels of crude in South Korea's southern city of Yeosu, with Seoul having the priority right to buy the oil when supplies become dangerously unstable.

Source: (C) 2012 BBC Monitoring Asia Pacific