South Korea has signed a multi-billion dollar deal with Abu Dhabi National Oil Company (Adnoc) to develop three new oil fields.
The joint venture, under which Korea National Oil Corporation (KNOC) will take a 40 per cent stake with Adnoc retaining 60 per cent, is an attempt by the Asian powerhouse to secure oil resources, the country’s leader said on Monday.
“We now have our own oil reserves in the Middle East,” South Korean President Lee Myung-bak said in a statement. “Through this, stable crude supply to us is more guaranteed, and our energy security taken a big step forward.”
The project involves two onshore and one offshore field that could take several years to produce oil, but is one of the first times that a non-European or American partner has waded into oil exploration and production in the Gulf.
The Korean government stated that the Korean consortium, made up of KNOC and another firm, GS Energy, is expected to invest $2 billion (Dh7 billion) of the estimated $5 billion total cost of developing the fields.
General Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, yesterday said the agreement comes within the framework of distinguished bilateral relations and strategic partnership between the UAE and South Korea, and expressed his aspirations for further cooperation.
The deal gives South Korea access to fields with combined reserves of at least 570 million barrels of oil, to which Seoul has previously said it would have exclusive rights if other oil supply sources were disrupted.
It is expected that crude oil production begins in 2014, if the development starts as planned this month, and could rise to 43,000 barrels per day, as Gulf news stated.
The deal comes just weeks after Abu Dhabi and South Korea signed a wide ranging Memorandum of Understanding (MOU), and soon after Kepco, the Korean energy giant, was granted the contract to build four nuclear reactors in the UAE.
To be mentioned that, GS Energy will have a 6% stake in the 40% Korean section of the joint venture.