South Korea clinched a landmark oil field development deal in Abu Dhabi, in the United Arab Emirates on Sunday during President Lee Myung-bak’s visit to the Arab nation, raising hopes for the nation bolstering its energy security.
The set of agreements includes a memorandum of understanding which guarantees Korea to participate in the production of at least 1 billion barrels of crude oil from the Arab nation’s capital, according to the presidential office. It also includes heads of terms which ensure exclusive rights for Korea to develop three untouched oil fields there.
“Korea and the Korean people received a big gift from Abu Dhabi today. We will remember today as a very special day, as we did with our nuclear power plant export in 2009,” Lee said at the signing ceremony in Abu Dhabi which was also attended by his UAE counterpart Sheikh Khalifa bin Zayed Al Nahyan and crown prince Mohammed bin Zayed Al Nahyan.
“The (planned) 100-year partnership between the two countries which started through the nuclear deal was brought to a higher level today,” he said. “Korea proudly became the first country since the 1970s to enter an Abu Dhabi oil field.”
The UAE oil field deal is the biggest of its kind bagged by the country so far, Cheong Wa Dae said. The largest until now was one in Vietnam where the country secured around 100 million barrels of oil.
The 1 billion barrel production arrangement is estimated to be worth around 110 trillion won ($95 billion) while the three undeveloped oil fields are speculated to have a reserve of 570 million barrels of crude, according to the presidential office.
President Lee Myung-bak (left) poses with his United Arab Emirates counterpart Sheikh Khalifa bin Zayed Al Nahyan during their summit meeting in Abu Dhabi on Sunday. (Yonhap News)
Should the signing of concession contracts follow promptly, Korea will begin producing 35,000 barrels of oil a day in the UAE from 2013, the office said.
The two sides were not able to ink the contracts this time as the existing development permits for oil fields held by leading U.S., U.K. and Japanese firms are set to expire from 2014.
Korea expects the deal to raise the resource-scarce country’s self-dependence rate of oil from current 4 percent to 15-20 percent in the next few years.
Korea is the world’s fifth-largest crude oil importer, relying on the Middle East for over 80 percent of its oil imports.
The UAE is its second-largest supplier after Saudi Arabia, from which Korea brought in 105 million barrels of crude, or 10.2 percent of its total demand, as of last year, according to presidential aides.
The UAE is the world’s sixth-largest producer and third-largest exporter of oil.
The presidential aides said the success of the oil deal largely came from Lee maintaining a solid economic partnership with his UAE counterpart despite Korea’s lack of large-scale overseas oil development experience. Korea ranks 77th in the global crude development industry, according to Korea National Oil Corp.
The substantial collaborations between the two nations have been developing further since Korea won a $20 billion contract in December 2009 to build four nuclear reactors in the Arab state by 2020.
Initial works for the oil field deal was launched last year when state-run Korea National Oil Corp. signed an MOU with Abu Dhabi National Oil Company last August to work on oil exploration and storage.
As well as nuclear energy issues, the two leaders discussed ways to expand ties in new growth areas such as non-memory chips, finance and contents in a summit meeting, according to the office.
Lee visited the eastern town of Al Ain upon arrival to the UAE for the second time on Saturday to meet 130 Korean troops on a two-year mission to help train UAE’s special forces.
He is to attend the ground-breaking ceremony for initial works at the proposed Braka nuclear power plant site and travel to Dubai later that day to receive the Zayed International Prize for the Environment in recognition of his support for global green growth.
At a separate event, the two states also agreed to bolster exchanges in human resources and education in the nuclear energy sector, the Ministry of Knowledge Economy said.
The $31.5 billion program allows for active workforce exchanges among state-run Korea Electric Power Corp. and Korea Hydro & Nuclear Power Co., and UAE’s Emirates Nuclear Energy Corp. and Institute of applied technology, ministry officials said.
By Koh Young-aah (email@example.com