SEOUL, Nov 22 (Reuters) - The UAE's state-run energy giant
Abu Dhabi National Oil Co (ADNOC) will lease oil storage
facilities in South Korea capable of storing six million barrels
of crude for three years, state-run Korea National Oil Corp
(KNOC) said on Thursday.
This is the first time the United Arab Emirates' ADNOC has
leased storage in South Korea, a KNOC spokesman said. It becomes
the twelfth international company to hold storage facilities
located in the world's fifth-largest crude importer, joining
other producers, oil majors and investment banks.
For producers, storage in South Korea gives them flexibility
to meet fluctuations in demand from Asian buyers. It also allows
them to sell smaller cargoes than the two million barrels that
typically sail on Very Large Crude Carriers from the Middle East
For South Korea, leasing storage to producers contributes to
its security of oil supply. It has first rights to crude in
storage in case of emergency.
The storage contract was signed on Wednesday.
"All six million barrels of crude oil will be shipped to the
storage facility within the first half of next year under the
contract," a KNOC spokesman told Reuters by phone. The oil would
be held in storage near the port of Yeosu, about 500 kilometres
south of Seoul, he said.
The Korean government holds a total of 146 million barrels
of storage facilities for its strategic crude and fuel reserves.
Of the total, 40 million barrels of capacity is reserved for
leases to oil producers, majors and investment banks, and as of
end-October a combined 30 million barrels of crude and fuel was
stored there, according to KNOC data.
The announcement was made while Korean President Lee
Myung-bak, and other government and business officials were
visiting the UAE to mark the start of construction there of the
country's first nuclear reactor. A Korean consortium in 2009 won
an order for some $20 billion worth of nuclear plant and
construction work there.
The visit comes after Seoul shut down two reactors in South
Korea due to the discovery that thousands of components at the
plants had forged safety certificates. The UAE has said it has
been assured by Seoul on the safety standards of South Korean
(Editing by Simon Webb and Himani Sarkar)