GS Energy gets long-term oil deal

A Korean consortium consisting of GS Energy and state-run Korea National Oil Corporation (KNOC) has won a 40-year contract for a share of oil from the world’s sixth-largest oilfield in terms of reserves in Abu Dhabi.

GS Energy on Wednesday said it was the high bidder for a 3 percent stake in the oilfield operated by Abu Dhabi Company for Onshore Oil Operation (ADCO), which manages 15 oilfields in the United Arab Emirates.

The oil extraction will be jointly managed with the state-run Abu Dhabi Oil Company holding a 60 percent stake and international companies dividing up the remaining 40 percent.

The company said it signed the deal at the headquarters of Abu Dhabi Oil Company and GS Energy’s Vice Chairman Rah Wan-bae attended the ceremony.

ADCO selected three international partners through bidding so far. The Korean consortium led by GS Energy acquired 3 percent, while Total of France took 10 percent and Japanese company Inpex Corporation 5 percent.

ADCO will select more international partners for the rest of the 22 percent stake of the field.

Through the deal, Korea will get about 800 million barrels of oil over the next 40 years, or 50,000 barrels per day, GS said, adding that it expects to bring the oil from Abu Dhabi to Korea starting in July.

The ADCO oilfield currently has estimated reserves of 27.1 billion barrels and produces 1.6 million barrels per day.

Almost half of Abu Dhabi’s crude oil comes from the field, according to KNOC.

The oil being produced in the field is Murban crude, which trades at a higher price than Dubai oil on the international market.

As it has been considered one of the largest oilfields in the world, only global major companies such as Exxon Mobil, Total and Shell were selected as partners in the past 75 years.

“This is a risk-free business because we don’t have to spend any money to find out whether a place actually has oil or not,” said GS in a statement. “Through this business we think we have provided a system that can create profits stably.”

GS Energy said it will run the business efficiently with technical support from KNOC.

GS Energy is currently running oil exploration projects overseas, including the Nemaha field in Oklahoma, and plans to continue to expand its business.

“Previously, only major global companies were able to be a part of this oilfield, but the great support from the Korean government and KNOC was a big part of this success,” said Rah.

BY KWON SANG-SOO [kwon.sangsoo@joongang.co.kr]