South Korea’s national oil company is deepening its relationship with Abu Dhabi’s as it awaits a decision on its bid for a stake in the emirate’s major onshore oil concession.
Korea National Oil Corporation (KNOC) is understood to be among the companies that have bid for a 5 per cent stake in the new Abu Dhabi Company for Onshore Oil Operations (Adco), the company formed to dole out concessions to operate the emirate's 15 prime onshore oilfields for the next 40 years.
In January, France’s Total won the first 10 per cent stake and operating rights for the best of the fields. The deadline for submitting bids for the remaining 30 per cent of Adco was early last month. The remaining bidders include BP and Royal Dutch Shell, which were stakeholders in the old concession, as well as newcomers that include some of the biggest buyers of Abu Dhabi crude oil: KNOC, PetroChina and Japan’s Inpex.
Companies have been asked to submit bids for either 10 per cent or 5 per cent stakes. Abu Dhabi National Oil Company (Adnoc) will retain a 60 per cent stake in Adco.
Last week, as part of a major trade mission headed by the South Korean president Park Geun-hye and received by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, KNOC and the Korea Institute of Geoscience and Mineral Resources signed an initial agreement with Adnoc for wide-ranging cooperation on research and development for oilfields in the UAE, including enhanced oil recovery, which has been a key consideration for Adnoc in evaluating concession bids.
Suh Moon-kyu, KNOC’s chief executive, last week said the R&D deal is aimed initially at improving the development of the Haliba field, near Abu Dhabi’s southern border with Oman, which is one of three oilfields KNOC is developing with GS Energy, a unit of the Korean conglomerate GS Group.
Under the terms of a deal agreed three years ago, Adnoc, KNOC and GS Energy formed Al Dhafra Petroleum Operations Company to explore and develop the three fields.
KNOC last week said it had extracted 18,000 barrels of crude from appraisal wells in the Haliba field in tests last year and confirmed that its chemical component was close to Abu Dhabi's flagship Murban crude. The company said it expected to have production there at 5,000 barrels per day by the end of 2017, rising to 40,000 bpd in 2019. The consortium said it was continuing to collect seismic data and would this year drill appraisal wells on the offshore field, which covers about 4,800 square kilometres.
While the potential recoverable oil in the three fields of nearly 1 billion barrels is a relatively small proportion of the UAE’s estimated 98 billion barrels, both countries have been keen to deepen their oil industry ties.
South Korea is one of the world’s largest importers of oil – it has no domestic resources and consumes about 2.5 million bpd, with almost all of its imports coming from Arabian Gulf countries. It imported 12 per cent of its crude oil from the UAE in 2013, the last year of complete data, according to the International Energy Agency.
The UAE exports almost all of its oil to Asia, with long-term customers in China, Japan and South Korea accounting for the vast bulk of those exports.
amcauley@thenational.ae
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