ABU DHABI, March 13 (Yonhap) -- After being sidelined for decades in international oil field development, South Korea opened a new chapter Sunday in its efforts to bolster "energy security" by clinching a key contract with the United Arab Emirates (UAE).
After a summit with the UAE president, Sheikh Khalifa bin Zayed Al Nahyan, South Korean President Lee Myung-bak announced a deal to develop a minimum of 1 billion barrels of crude oil in the Middle Eastern nation over 30-40 years from as early as 2014. The two sides struck a separate agreement on the joint exploration of three untapped oil fields.
It marked South Korea's biggest-ever oil field development contract with a foreign nation, a major breakthrough in Seoul's push for a buffer against possible oil shocks. South Korea imports all of its oil demands.
South Korean President Lee Myung-bak (L) holds summit talks with UAE President Sheikh Khalifa bin Zayed Al Nahyan in Abu Dhabi on March 13. (Yonhap)
Securing a more stable oil supply has gained urgency amid hikes in oil prices due to ongoing political unrest in the Middle East and North Africa.
Although South Korean oil firms have participated in some small-scale oil production in Vietnam and the Middle East, the UAE deal is the first time the country has won such a big contract in an industry long monopolized by global oil giants such as ExonMobil, BP, Shell and JX Nippon Oil & Energy.
It is like joining the "Premier League" of football, South Korean officials said, adding the agreement with the UAE will rewrite South Korea's oil development history.
Lee said mutual trust between the two nations was behind the deal.
When the Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed al Nahyan, traveled to South Korea last May, the president said, "I told him that giving South Korea, which produces not a single drop of oil, a chance for direct participation in oil field development would be a starting point for bilateral cooperation."
Lee said despite skepticism over South Korea's capability in independent oil production, the UAE respected "the passion and potential" of South Korean entrepreneurs and people, who have risen to the top of the shipbuilding and car making sectors.
Presidential aides said the shared vision for future growth between the two sides was another factor for the deal.
"The entry into Abu Dhabi's oil field development was possible as there was common understanding on joint future strategies that look 100 years ahead," Kwak Seung-joon, the chairman of the Presidential Council for Future and Vision, told reporters in a background briefing.
The UAE has emerged as South Korea's major economic partner in the Middle East. Thirteen months ago, the UAE awarded South Korea a US$20 billion contract to construct four nuclear power plants.
South Korea views the UAE as a bridgehead for its inroads into the region, while the UAE requires partnerships with South Korea in its search for a new growth model away from heavy dependence on oil.
During Seoul's push for the oil development deal with the UAE recently, the South Korean president sent a personal letter to his UAE counterpart reading, "If you only think about the aspect of oil business, you won't be able to let South Korea take part in (oil development projects). But South Korea is not just an oil developer but the UAE's economic partner looking a century ahead," according to Lee's spokeswoman, Kim Hee-jung.
Bilateral military ties have also grown, as shown in the dispatch of 130 South Korean troops, mostly commandos, to the UAE for the purpose of helping train their local counterparts.
The major energy deal with the UAE is another feat of the South Korean leader who has focused on the so-called sales diplomacy to improve economic ties with foreign nations. Lee was a business CEO himself before entering the political circles.
Since taking office in February 2008, Lee has been known for vigorous "energy diplomacy" aimed at securing a stable supply of energy.
When the deal with the UAE is implemented, South Korea's energy self-sufficiency ratio for oil and gas is expected to rise to around 15 percent from the current 10.9 percent. The figure represents the amount of oil and gas developed by South Korean firms to the country's total demands.
Lee said his government aims to raise the ratio to 20 percent to help South Korea maintain sustainable growth and deal with a frequent energy crisis.