Expanding the strategic partnership between the United Arab Emirates and the Republic of Korea, the governments of Abu Dhabi and South Korea entered into a wide-ranging Memorandum of Understanding (MoU) related to cooperation in the oil and gas sector.
The Abu Dhabi National Oil Company (Adnoc) and the Korean National Oil Company (Knoc) took a first step toward South Korean Upstream participation in Abu Dhabi, by signing a separate Heads of Terms Agreement related to further exploration and potential development of three undeveloped blocks held by Adnoc and believed to have more than 500 million barrels of oil in place.
A third MoU relating to future areas of economic cooperation in semiconductors, media, and investment and financial services was also signed.
President His Highness Sheikh Khalifa bin Zayed Al Nahyan, who witnessed the signing of the agreements, welcomed the latest step toward closer UAE-South Korea ties, stating: "The relationship between the United Arab Emirates and [South] Korea continues to grow stronger and deeper, creating new benefits for the people of both nations, including greater energy security, employment creation and economic development. We look forward to the further advancement of this important relationship."
South Korean President, Lee Myung-bak, who also witnessed the signing of the three agreements commented: "First of all, I would like to deliver the deepest gratitude to President Khalifa and General Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, for their continued support. I would also like to extend my appreciation especially to the persons concerned in the government of the Emirate of Abu Dhabi and staff of Adnoc for their sincere support in producing these meaningful results".
"Today, the [South] Korean people and I have received another great gift from the Abu Dhabi government and the Emirati people. This precious gift will continue to be meaningfully appreciated. First prompted by the nuclear power plant cooperation, the strategic partnership between the two countries has been evolving ever since and has now matured into another phase involving areas of petroleum exploration and production. What is even more exciting is that the two countries' brotherhood continues to advance toward infinite possibilities for centuries to come. The [South] Korean people and I will continue to cultivate this precious relationship, and the continued support and trust from the Abu Dhabi government and the Emirati people will be very much appreciated."
Government-to-Government MoU includes a commitment by the Government of Abu Dhabi to open opportunities to qualified South Korean exploration and production companies to participate in the upstream development of one or more fields with cumulative technically recoverable reserves of at least one billion barrels. A second area of cooperation facilitates the storage of six million barrels of Abu Dhabi crude oil in South Korea's Strategic Petroleum Reserve (SPR).
The storage arrangements will enhance the energy security of the Republic of Korea, while also giving Adnoc greater flexibility in supplying customers in the Korean and neighboring markets. A final area of cooperation reflected a commitment to provide South Korean companies purchasing Abu Dhabi crude a first-right of refusal for the off-take of up to 300,000 barrels per day of Abu Dhabi crude. This volume would be made available gradually for South Korean purchasers as Abu Dhabi continues to expand its production capacity in line with previously announced targets.
Together, the various elements of this government-to-government agreement significantly bolster the energy security of the Republic of Korea. The agreement also creates new channels for foreign investment in Abu Dhabi's oil and gas sector, while enhancing Abu Dhabi's standing as one of the world's most secure sources of hydrocarbon fuels.
The Heads of Terms agreement signed between Adnoc and Knoc facilitates the first entry by any South Korean firm into the highly-prized upstream sector of the Emirate of Abu Dhabi. In keeping with standard industry practice, the parties to the Heads of Terms agreement will proceed to negotiate the terms of a full contract, which, when finalised, would enable investment and implementation of an agreed exploration and potential development plan for the areas under contract.
Future Growth Engines MoU identified areas that the two governments believe will be significant drivers of future growth in both economies, specifically including semiconductors, media, and investment and financial services.
All three agreements demonstrate the growing importance of the South Korea-UAE relationship, as well as the substantial benefits resulting from the strategic partnership formed by the two governments following the award of the widely-publicized UAE nuclear tender to a consortium of companies led by Korea Electric Power Corporation (Kepco).