Oil Ties

Haliba Field is Area 1 on this map.
Haliba Field is Area 1 on this map.

 

Since 2014, the Korea National Oil Corporation (KNOC) and GS Energy, leading Korean players in the oil and gas industry, have been engaged in joint projects led by the Abu Dhabi National Oil Company (ADNOC), the United Arab Emirates's state-owned oil firm. Through joint oil and gas projects, the U.A.E. and South Korea are seeking ways to deepen their ties in the oil and gas field.

For the first time as Korean companies, KNOC and GS Energy secured an opportunity to participate in an Abu Dhabi oil concession project alongside ADNOC and other major European players in 2012. This project is mainly focused on extracting discovered oil and gas. The same year, KNOC and GS Energy won three oil and gas exploration and development projects for three appraisal wells at Haliba Field on the Omani border by signing with ADNOC.

Regarding the former, the KNOC is one of the international players that has won a 5 percent stake in the project led by the Abu Dhabi Company for Onshore Oil Operations (ADCO), a newly formed venture company that will dole out concessions to operate the emirate’s 15 prime onshore oil fields for the next 40 years.

For the latter, the Korean partners are engaged in a five-to-six-year full-field development. If the drilling is successful, the Korean partners can produce a few thousand barrels of oil per day while they are continuously engaged in a drill stem test, which aims to examine the pressure, permeability and productive capacity of a geological formation during the drilling of the well.

In May and October 2014, the joint exploration team comprised of ADNOC, the KNOC and GS Energy extracted 18,000 barrels of crude from appraisal wells in the Haliba Field on the Omani border and confirmed that its chemical component is close to Abu Dhabi's flagship Murban crude.

The KNOC said that it is expected to produce 5,000 barrels per day by the end of 2017, rising to 40,000 bpd in 2019. It also said it was continuing to collect seismic data and would drill appraisal wells this year on the offshore field, too, which covers about 4,800 square kilometers.

Haliba is one of three exploration blocs in which the Korean consortium (the KNOC holds 30 percent and GS Energy 10 percent) holds a 40 percent share, with the remainder being held by ADNOC. The partners have been gathering data and seismic imaging of other fields to develop oil reserves.

The entire project involves two onshore and one offshore field. It is the first time that a non-European or U.S. partner has waded into oil exploration and production in the Gulf.

While the potential recoverable oil in the three fields is known to be nearly 1 billion barrels, which is a relatively small proportion of the U.A.E.’s estimated 98 billion barrels, both countries have been keen to deepen their oil industry ties.

South Korea is one of the world’s largest importers of oil – it has no domestic resources and consumes about 2.5 million bpd, with almost all of its imports coming from Arabian Gulf countries. It imported 12 percent of its crude oil from the U.A.E. in 2014, according to complete data of the last year, provided by the International Energy Agency.

The U.A.E. exports almost all of its oil to Asia, with long-term customers in China, Japan and South Korea accounting for the vast bulk of those exports.

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