During an official visit to the Republic of Korea by His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, the Abu Dhabi National Oil Company, ADNOC, has signed three framework agreements with Korean energy companies. The agreements will explore upstream exploration and production opportunities, potential downstream investments and bunkering opportunities for both crude oil and liquified natural gas, LNG.
The agreements have been signed with the Korea Gas Corporation, KOGAS, the world’s second largest buyer of LNG, which has conducted a feasibility study on LNG bunkering at Fujairah port; the Korea National Oil Company, KNOC, which has a 30 percent stake in ADNOC’s Al Dhafra Petroleum company and is seeking to increase oil storage in the Republic of Korea by 24 million barrels until 2025 and GS Energy, an independent Korean energy company that has a 10 percent stake in Al Dhafra Petroleum and 3 per cent stake in ADNOC Onshore.
The agreements were signed by Dr. Sultan bin Ahmad Sultan Al Jaber, Minister of State and ADNOC Group CEO, and Kim Young Doo KOGAS CEO; Yang, Su Yeong, KNOC CEO and Huh, Yongsoo, GS Energy CEO.
Commenting on the announcement, Dr. Al Jaber said, “The UAE, Abu Dhabi and ADNOC have enjoyed excellent business relationships with the Republic of Korea and the growing links between ADNOC and Korean companies are a testament to the depth and importance of those relationships, which the leadership of the UAE is keen to enhance.
“Our discussion explored domestic and international growth opportunities across a range of areas, including oil and LNG bunkering, meeting the Republic of Korea’s growing energy demands and attracting investment to our expanding upstream exploration and development operations and our downstream and gas expansion plans.”
He added, “As we successfully deliver our 2030 smart growth strategy, we will continue to work with partners who enable us to unlock and maximize value, contribute technology and help us secure access to the new centers of global demand.”
South Korea was the world’s eighth-largest energy consumer in 2017. According to the International Energy Agency, IEA, it imported about three million b/d of crude oil and condensate, making it the fifth-largest importer in the world. It is highly dependent on the Middle East for its oil supply, and the region accounted for more than 82 percent of its 2017 crude oil imports, of which 11 percent was supplied by ADNOC.
It is also the world’s third-largest LNG importer. According to its ’13th Long-term Natural Gas Supply’ plan domestic natural gas demand, for power generation, is expected to reach 40.49 million tonnes (MMt) by 2031 – a 3 MMt increase over 2017 levels.
According to the IEA, the Republic of Korea is home to three of the ten largest crude oil refineries in the world, making it one of Asia’s largest petroleum product exporters. At the end of 2017, it had almost 3.2 million b/d of crude oil distillation refining capacity and ranked sixth largest for refining capacity in the world.
As part of the Republic of Korea’s efforts to become a major liquids storage and trading hub in northeastern Asia, KNOC, through joint ventures with other firms, has been building the country’s first commercial terminals for crude oil and petroleum products at Yeosu and Ulsan, which will hold a total capacity of 36.6 million barrels. The first facility, located in Yeosu in the southwestern region of the country, came online in 2013, with 8.2 million barrels of capacity. The other two facilities are being constructed in two phases in Ulsan in the southeastern region of the country and will bring 28.4 million barrels of capacity online by 2026.
To protect against oil supply disruptions and price fluctuations, the Republic of Korea holds strategic and commercial oil reserves for both crude oil and petroleum products. KNOC operates nine state–run strategic storage facilities with 146 million barrels of capacity. As of March 2018, KNOC held 96 million barrels of strategic reserves, and about 27 million barrels of inventories are stored as international stockpiles under agreements between the Republic of Korea and other governments.