S Korea signs deal on UAE oil development

South Korea signed its first agreement with the United Arab Emirates (UAE) on Monday to develop two inland and one offshore oil fields in the Middle Eastern country that are expected to yield up to 43,000 barrels of oil per day. The deal concludes, at least for now, a controversial claim by Seoul that Abu Dhabi had agreed to "guarantee" its participation in the latter's oil development project under a 2009 deal to build a South Korean nuclear power plant in the UAE, South Korea's News Agency (Yonhap) reported. Under the new agreement signed in Abu Dhabi, a South Korean consortium led by the state-run Korea National Oil Corp. will have a 40 percent stake in the three oil fields that will be jointly developed with the Abu Dhabi National Oil Co., according to South Korea's Ministry of Knowledge Economy. The South Korean consortium will fund about US$2 billion of the $5 billion project, it said. The three areas are said to hold 570 million barrels of oil initially in place, which refers to the amount of oil potentially held in the areas and not the amount of oil that can be recovered. Still, the ministry said the oil fields will likely yield up to 43,000 barrels of oil daily at the peak of their operation, adding commercial production may begin as early as 2014. South Korea will be entitled to 40 percent of total production, or about 17,000 barrels of oil per day, which will raise the country's energy self-sufficiency rate by 0.5 percentage point from the current 13.7 percent, it said. In addition, the sides have agreed to ship the entire amount of 43,000 barrels to South Korea in case of an emergency, such as an outbreak of war on the Korean Peninsula, which will account for 9.2 percent of South Korea's total overseas oil production. "This agreement marks (South Korea's) first participation in Abu Dhabi's oil development, but also an opportunity when the so-called strategic partnership established under the 2009 nuclear power plant deal will be further matured to become a partnership for the next 100 years," Minister of Knowledge Economy Hong Suk-woo was quoted as saying. The South Korean commerce minister is on a three-day visit to Abu Dhabi from Sunday to attend the signing of the oil development project and to inspect the nuclear power plant currently under construction.