South Korea’s state-run Korea National Oil Corp (KNOC) and the Abu Dhabi National Oil Co (ADNOC) have failed to renew their joint crude storage agreement in Yeosu on the country’s southwest coast, a KNOC official has said.
“ADNOC’s three-year contract recently expired and we have failed to renew it,” the official said, but declined to give the reason.
ADNOC and KNOC signed a joint storage deal in 2013 under which the former stored 6mn barrels of crude oil at Yeosu. South Korea had first right over the oil in the event of a supply emergency.
The termination of this agreement comes just as the UAE has signed an agreement with India to store 5.86mn barrels of crude oil at its strategic storage facility.
South Korea’s joint storage agreement was part of a package deal with the UAE under which KNOC was to get stakes in upstream projects in Abu Dhabi, according to the official.
A joint venture of KNOC and GS Energy signed an agreement with ADNOC in May 2015 granting it a 3% stake in Abu Dhabi’s 1.8mn bpd ADCO onshore oil concession.
The deal secured 800mn barrels of Murban crude for the next 40 years – approximately 50,000 bpd – for South Korea and is the country’s biggest ever supply deal.
KNOC has also been developing two onshore Abu Dhabi blocks – Area 1 and Area 2 and offshore Area 3 – under a deal signed in March 2012.
The joint storage deal was an effort by South Korea to turn itself into a regional oil hub. KNOC has 26.6mn barrels of foreign oil stored at its tanks under joint storage agreements, including the 6mn barrels of crude from ADNOC.
According to the KNOC official, the company has been pushing for a deal with the Iranians to store 2mn barrels of crude oil and condensate but nothing has been confirmed yet.
KNOC operates nine state-run oil storage sites which can hold 146mn barrels of crude and oil products, of which 127.5mn barrels are for crude and 18.5mn barrels for oil products.
