For Stable Oil Supply: Seoul Should Actively Engage in Energy Diplomacy

Energy officials and oil importers are concerned over a warning from Iraq that it will suspend oil exports to South Korea unless companies here stop oil exploration in the northern Kurdish region of the Middle Eastern country. The warning is feared to deal a blow to the country as its oil supply totally depends on imports from abroad, mainly the Middle East. About 5.2 percent of oil imports currently comes from Iraq.
The Korea National Oil Corp. (KNOC) said Monday that the Iraqi government gave SK Energy, a leading South Korean refiner, the warning by phone, requesting that the local firm stop exploration because it did not get permission from Baghdad. SK Energy is a major participant in a Korean consortium led by KNOC that concluded an oil exploration deal with the Kurdistan autonomous government last month.

It is regrettable that the local consortium has signed such a deal with the Kurdistan authorities without getting approval from the central Iraqi government. The consortium should have obtained permission for the contract to tap the Bazian oil field in the Zagros Basin, northern Iraq. The field is estimated to hold 500 million barrels of crude oil. KNOC has 38 percent stake in the consortium, followed by SK Energy with 19 percent.

It is obvious that the Iraqi warning might have a negative effect on South Korea’s efforts to secure stable oil supply from the war-torn country. When it decided to dispatch its troops to Iraq at the request of the United States, the Korean government stressed the importance of economic rewards, including oil exploration and reconstruction projects, from the military cooperation.

Unfortunately, South Korea is on the verge of losing its part in such rewards.

Korea Times