Seoul: South Korea signed an agreement yesterday with Kuwait for joint storage of 2 million barrels of crude oil, adding to the country's emergency stockpile.
The country's energy ministry also said state-run Korea National Oil Corp (KNOC) signed a joint crude stockpiling agreement in September allowing French oil major Total to store 2.2 million barrels of crude in KNOC's storage units.
The agreement with Kuwait gives South Korea first rights to purchase the crude from state-run Kuwait Petroleum Corporation, which it could exercise in case of an oil shortage, the Ministry of Commerce, Industry and Energy (MOCIE) said.
"This is a win-win situation for both countries as it gives South Korea a purchasing right while Kuwait has guaranteed sales in Northeast Asia where the demand for oil is growing," the ministry said.
The Kuwait and Total agreements mean KNOC now has joint storage deals for 27 million barrels of crude. These include 11.3 million barrels with Norway's oil and gas group Statoil, 6 million barrels with Algeria's Sonatrach, 2.7 million barrels with Swiss-based trader Glencore, and 2.7 million barrels with China's state trader Chinaoil.
The joint stockpile equals about 13 days of South Korean consumption. MOCIE plans to increase the total joint storage amount to 40 million barrels by 2010.
Demand for joint stockpiling is growing in the region as oil prices remain volatile and major energy-consumer China has started to build strategic stocks. China, which started to fill its storage tanks earlier this year, plans to have capacity for 102 million barrels by 2008.
