UAE & Korea come closer to discuss stockpiling petroleum
Al Hamli, UAE energy minister, confirmed discussions to supply UAE crude to Korea for stockpile
The UAE and South Korea have signed a five-year agreement to boost energy co-operation, which may include investments in the downstream sector.
According to a memorandum of understanding, the two countries agreed to consider possible investments in projects in logistics and distribution, supply of crude oil and petroleum products, marine transportation, petrochemicals, and construction and services.
UAE energy minister, Mohammed Al Hamli, said the country was studying a proposal by Seoul for the UAE to help supply South Korea with crude oil for its strategic stockpile. Last December, South Korea discussed the proposal with Al Hamli and the head of state oil firm Abu Dhabi National Company, Yousef Omair Bin Yousef.
Mira Sun, a spokeswoman for South Korean President Roh Moo-Hyun, said: “For Korea, this is a win-win arrangement, because it will collect renting fees and will also have a prior guarantee for purchasing the stockpiled crude oil.”
A joint oil-stockpiling deal between Opec producers and major consuming nations would give producers like those in the Gulf—located at least a month’s journey away from key markets—an easy, quick and profitable way to address any shortages.
Last September, South Korea said it aims to sign more international joint stockpiling agreements.
Deputy energy minister Oh Young-ho said Saudi Arabia was one of two states with which South Korea was discussing possible joint stockpiling.
Apart from helping build their customers’ reserves, producers are also actively discussing investments in the downstream sector in the growing Asian market.
The UAE is South Korea’s second largest crude oil supplier, with shipments totalling 150 million barrels last year.
Bilateral trade, which reached US $12.7 billion last year, was heavily tilted in favour of Abu Dhabi, whose exports to Seoul topped $10 billion, according to the state news agency.