KNOC and GS Energy to participate in the exploration and development of oil blocks in Abu Dhabi
A Korean consortium of Korea National Oil Corp. and GS Energy signed a contract with Abu Dhabi National Oil Co. to develop three untapped oil blocks in Abu Dhabi at the ADNOC headquarters on March 5. Among those on hand at the signing ceremony are GS Caltex Chairman Hur Dong-soo; PCFV Chairman Kwak Seung-jun; MKE Minister Hong Suk-woo; KNOC President Kang Young-won; ADNOC CEO Al Suwaidi; and Al Dhaheri, secretary general of the Supreme Petroleum Council.
Korea is making inroads into the crude oil exploration market in the United Arab Emirates, which ranks sixth in the world in terms of crude oil reserves.
The Ministry of Knowledge Economy (MKE) said on March 5 that a Korean consortium comprised of Korea National Oil Corp. (KNOC) and GS Energy signed a contract with Abu Dhabi National Oil Co. (ADNOC) to develop three untapped oil blocks in Abu Dhabi.
The contract between Korea and the UAE followed an MOU on cooperation in the crude oil and gas exploration and development sectors between their governments, signed in March 2011.
Under the contract, Korea will have a 40 percent stake in the fields — KNOC with 34 percent and GS Energy with 6 percent — while the remainder will be held by ADNOC.
The 30-year contract involves three undeveloped oil blocks — two onshore and one offshore — with the total estimated oil initially in place standing at 570 million barrels.
The Korean consortium will shoulder $2 billion out of the $5 billion required for oil development and production. Oil exploration will begin in March with production slated for as early as 2014.
The three untapped oil blocks are expected to churn out up to 430,000 barrels of crude oil per day.
The Korean side will secure 17,000 barrels of crude oil per day or 3.7 percent of the 465,000 barrels made available daily on its own development projects in 2011. The addition will increase Korea s own crude oil development rate by 0.5 percentage points.
In particular, Korea will be able to secure all production from the three oil blocks in case of emergency, enhancing its own crude oil development rate by 1.3 percentage points.
The size of the two undeveloped onshore blocks is one-tenth of the Abu Dhabi area.
On hand at the signing ceremony for the contact at the ADNOC headquarters in Abu Dhabi were GS Caltex Chairman Hur Dong-soo; Kwak Seung-jun, chairman of the Presidential Council for Future and Vision (PCFV); Minister of Knowledge Economy Hong Suk-woo; KNOC President Kang Young-won; Al Dhaheri, secretary general of the Supreme Petroleum Council; and Al Suwaidi, ADNOC CEO.
Later in the day, the participants met with Abu Dhabi Crown Prince Sheikh Mohammed Bin Zayed Al Nahyan, who stressed the 100-year strategic partnership between the two countries through the signing of the contract.
MKE officials said they believed that Korea and the UAE will hold additional negotiations on Korea s opportunities to participate in the upstream development of one or more fields with cumulative technical recoverable reserves of at least one billion barrels, as agreed under an MOU on the oil and gas sector between the two countries in the presence of Korean President Lee Myung-bak and UAE President Sheikh Khalifa Bin Zayed Al Nahyan.
PCFV Chairman Kwak said the signing of the contract was possible due to the strong trust between the UAE president and the Korean president.
Korea and the UAE have been involved in a strategic partnership since December 2010 when Korea was awarded a $20 billion contract to build four nuclear power plants in the Middle East nation.
Korea has become the fourth country to enter the upstream sector of crude oil exploration and development in the UAE.
The United States, United Kingdom, and France were allowed to explore oil fields in the UAE, which has more than 1 billion barrels of reserves, during the 1930s and 1940s, while Japan was given permission to do so in 1973. Under the deal, KNOC, which is ranked 77th in the global standing of petroleum explorers, has now been allowed to join the petroleum exploration club in the UAE, raising the possibility that the Korean company can be the fifth biggest petroleum explorer there.