South Korea and the United Arab Emirates will start exploring three oil fields in the Middle East nation this month that may need $5 billion in investments.
State-run Korea National Oil Corp. (KNOCPZ) and GS Energy Co. signed an agreement with Abu Dhabi National Oil Co. to develop and operate the fields for 30 years, South Korea’s Knowledge Economy Ministry said today in an e-mailed statement. Anyang, South Korea-based Korea National, or KNOC, will own 34 percent of the venture, with Seoul-based GS Energy holding 6 percent. Abu Dhabi National will have the remaining stake.
South Korea will become the fifth nation to develop oil fields in the United Arab Emirates, which has the world’s sixth- largest crude oil reserves, according to the statement. Initial estimates by KNOC, which signed a preliminary contract a year ago, and two independent experts show that the fields may have reserves of 570 million barrels of oil, the ministry said.
The contract “indicates a new chapter for South Korea’s drive to develop overseas oil fields,” Knowledge Economy Minister Hong Suk Woo said in the statement. The nation is also in talks with the United Arab Emirates to develop other fields that hold more than 1 billion barrels of oil reserves, he said.
The fields, two of which are on land and the third in the sea, may start producing as many as 43,000 barrels daily as early as 2014, the ministry said.
The South Korean companies will have the right in an emergency to import the entire output from the fields, the ministry said, without giving specific terms. The estimated daily output will be about 9 percent of the production from the country’s other overseas fields last year.
South Korea, which imports almost all of its oil and natural gas needs, plans to increase production at overseas fields to 35 percent of imported volumes by 2020, compared with about 14 percent, or 465,000 barrels a day, last year.
The United Arab Emirates supplied 87.2 million barrels of oil, the fifth-largest volume, to South Korea last year. GS Energy, created in January, owns an equal stake in GS Caltex Corp., South Korea’s second-biggest refiner, with Chevron Corp.
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