ABU DHABI -- South Korean President Lee Myung-bak on an official visit to the United Arab Emirates (UAE) announced Sunday that his country has signed its largest-ever oil field development deal, potentially valued at 110 trillion won ($98 billion), with the oil-rich Middle East country.
The deal, signed after Lee's summit with his UAE counterpart, Sheikh Khalifa bin Zayed Al Nahyan, here and made public in a live TV broadcast, will allow South Korea to secure at least 1 billion barrels from the existing oil fields in Abu Dhabi starting in 2014, helping Seoul raise its energy self-sufficiency ratio for oil and gas to 15 percent from the current 10.9 percent.
The potential volume is worth about 110 trillion won under current international oil prices.
Since taking office in February 2008, when South Korea's self-sufficiency ratio in oil and gas stood at slightly over 4 percent, Lee has vowed to lift the ratio to 20 percent, a level seen as a strategic buffer for possible energy shocks, during his term, which is set to expire in February 2013.
The UAE, which has the world's sixth-largest proven crude oil reserves with about 100 billion barrels and major gas reserves, has thus far opened its oil fields only to the United States, Britain, France and Japan.
South Korea, Asia's fourth-largest economy, is the world's fifth-largest crude oil consumer but entirely depends on imports for oil and gas.
South Korea's presidential office, Cheong Wa Dae, described the deal as a historic agreement in the nation's perennial efforts to secure a stable supply of oil.
A bilateral memorandum of understanding (MOU) on oil development was initialed by heads of the Korea National Oil Corp.
and Abu Dhabi National Oil Co. while Presidents Lee and Khalifa and Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al Nahyan were on hand, Cheong Wa Dae officials said.
The MOU will guarantee South Korea's participation in the development of large-scale oil fields that contain at least 1 billion barrels of oil, starting in 2014, said the officials.
The sides also signed three Heads of Terms (HOT) agreements, which will guarantee South Korea's rights to participate in the development of three untapped oil fields, which contain about 570 million barrels, according to the officials. HOT agreements are similar to an MOU but are not enforceable in a court of law.
The Korean officials said the exact value and other details of the contracts, still in the form of an MOU and HOT agreements, will be determined through follow-up negotiations set to start next year on a full scale.
The latest oil development deal between South Korea and the UAE has shown their growing economic partnerships. South Korea won a US$20 billion contract to construct four nuclear power plants in the UAE in December 2009.