Gulf News reported that the UAE’s state run energy giant Abu Dhabi National Oil Company will lease oil storage facilities in South Korea capable of storing six million barrels of crude for three years.
Korea National Oil Corporation spokesman said that this is the first time Adnoc has leased storage in South Korea. It becomes the twelfth international company to hold storage facilities located in the world’s fifth-largest crude importer, joining other producers, oil majors and investment banks.
For producers, storage in South Korea gives them flexibility to meet fluctuations in demand from Asian buyers. It also allows them to sell smaller cargoes than the two million barrels that typically sail on Very Large Crude Carriers from the Middle East to Asia. For South Korea, leasing storage to producers contributes to its security of oil supply. It has first rights to crude in storage in case of emergency.
KNOC spokesman said that all 6 million barrels of crude oil will be shipped to the storage facility within the first half of next year under the contract. The oil would be held in storage near the port of Yeosu, about 500 kilometers south of Seoul, he said.
According to KNOC data, the Korean government holds a total of 146 million barrels of storage facilities for its strategic crude and fuel reserves. Of the total, 40 million barrels of capacity is reserved for leases to oil producers, majors and investment banks and as of end October a combined 30 million barrels of crude and fuel was stored there.
