OPEC Stockpiling Crudes In Buyer Countries.

The trend of OPEC members storing crude oils in buyer countries was set in 2005 by Saudi Arabia, which proposed to do that in China and India. Now the UAE is considering doing the same in South Korea. The UAE and South Korea on May 13 signed a series of accords, including a memorandum of understanding (MoU) on stockpiling Abu Dhabi crudes in South Korea, on the second day of a visit by South Korean President Roh Moo-Hyun.

The MoU, whose terms have yet to be finalised, stipulates that South Korea will rent out facilities for stockpiling Abu Dhabi crude oil. Roh, the first South Korean president to visit the UAE, arrived in Abu Dhabi on May 12 and concluded his trip in Dubai, another of the UAE's seven members, on May 14. A South Korean spokeswoman said: "For Korea, this (MoU) is a win-win arrangement, because it will collect renting fees and will also have a prior guarantee for purchasing the stockpiled crude oil". The two sides signed a total of six MoUs, including one on energy co-operation, in addition to an agreement on economic, trade and technological co-operation, she said.

Once finalised, the stockpiling deal will give Abu Dhabi a marketing gateway to north-eastern Asia, one of the fastest growing markets for oil consumption. The MoU was signed by state-owned Korean National Oil Co. (KNOC) and Abu Dhabi National Oil Co. (ADNOC).

The UAE is South Korea's second largest crude oil supplier, with shipments totalling 150m barrels in 2005. The official news agency WAM said UAE Energy Minister Muhammad bin Dha'en al-Hamili, who met with Roh, "welcomed a Korean proposal for the UAE to store quantities of crude oil in South Korea's strategic reserves, bringing them close to major Asian consumption [markets]". It quoted Hamili as saying Abu Dhabi would study the proposal and "take the appropriate decision in due course". Oil from Norway, Algeria and China is already stockpiled in South Korea. Another MoU signed on May 13 provides for "building institutional foundations for bilateral co-operation" on energy matters and "preparing the framework for joint energy resource development". WAM said that, under the MoU, the two states will set up a joint committee which will examine possible joint ventures in the petroleum industry.