By ADAM SCHRECK, Associated Press
DUBAI, United Arab Emirates (AP) — Two South Korean companies secured rights Monday to hunt for crude oil in three undeveloped oil fields in the United Arab Emirates, offering the energy-hungry Asian nation greater access to Mideast oil.
The Korean investment is led by the state-run Korea National Oil Corp., which will hold a 34 percent stake in the joint venture with the Abu Dhabi National Oil Co. It is joined by Seoul-based GS Energy, which will control 6 percent.
ADNOC, which is owned by the Abu Dhabi government, will retain a majority stake in the fields.
The agreement is valid for 30 years. It covers exploration, development and oil production, according to a statement by Emirates state news agency WAM. Two of the fields are on land, and the other is off Abu Dhabi's Gulf coast.
South Korea is the world's sixth largest oil importer. The deal gives it access to reserves containing an estimated 570 million barrels of oil and is likely to require an investment of $2 billion, according to the South Korean Ministry of Knowledge Economy.
The ministry expects total production to reach 43,000 barrels of crude a day. That would give the Korean stakeholders access to just over 17,000 barrels a day, based on their share of the project.
Production is expected to start as early as in 2014, the ministry said.
Samuel Ciszuk, a consultant at KBC Energy Economics, said the deal highlights the growing importance of big Asian economies such as South Korea to the oil-rich Gulf states.
"It signifies quite a deep ... strategic relationship with Abu Dhabi," he said. "They're building a relationship that Gulf states traditionally had with European countries and the U.S."
The governments of Abu Dhabi and South Korea last year signed a series of agreements aimed at strengthening cooperation in the oil and gas industry. Those pacts included the broad terms of Monday's contract as well as a deal for Seoul to store six million barrels of Abu Dhabi crude oil in South Korea's strategic petroleum reserves.
In late 2009, the UAE awarded a South Korean consortium a prized $20 billion deal to build the country's first nuclear reactors.
South Korea is under pressure from longtime ally the United States to reduce its dependence on Iranian oil. It bought about 250,000 barrels per day, or 10 percent of its total oil imports, from Iran last year.
Abu Dhabi is the largest and richest of the seven United Arab Emirates. It serves as the federation's capital and controls nearly all the OPEC member's oil reserves.
Associated Press writer Hyung-jin Kim contributed reporting from Seoul, South Korea.
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