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(News Focus) Lee secures crude supplies, economic deals from Middle East

All News 21:00 February 10, 2012

By Chang Jae-soon

ABU DHABI, Feb. 10 (Yonhap) -- South Korean President Lee Myung-bak secured a tight safety net against any disruptions in crude imports and laid firm groundwork for a string of economic deals in a weeklong visit to Turkey and three major oil producers in the Middle East.

The most pressing issue for the trip, which included stops in Saudi Arabia, Qatar and the United Arab Emirates, was to ensure a stable supply of crude oil to South Korea in case Seoul cuts down on imports from Iran in line with U.S. sanctions.

That mission was accomplished early on.

During a visit to Riyadh, the Saudi oil minister, Ali al-Naimi, promised that the country will "accept whatever request from South Korea if the Korean government or companies want additional oil." The minister also said "supply is stable and reserves are enough."

The commitment laid to rest concerns in South Korea that a drastic cut in oil imports from Iran could hurt its slowing economy. South Korea relies on imports for all its oil needs and Iranian crude accounts for about 10 percent of the country's total oil imports.

South Korea gets about one third of its crude imports from Saudi Arabia. Together with Qatar and the UAE, the three countries account for about half of Seoul's total oil imports.

Washington has been trying to drum up international support for its campaign to dry up Iran's oil export revenues as punishment and pressure over the country's alleged nuclear weapons programs. Iran claims its nuclear programs are for peaceful purposes.

Lee also gave strong push to other potential economic deals.

In Turkey, the first stop of the four-nation trip, Lee and Turkish Prime Minister Recep Tayyip Erdogan agreed to conclude ongoing negotiations on a free trade agreement by June, and to restart stalled talks on a project to build two power-generating nuclear reactors on Turkey's Black Sea coast.

Officials said that a free trade pact with Turkey would allow South Korean firms to export goods to other parts of Europe via Turkey at low prices as Turkey and the European Union are linked by an agreement to remove or lower tariffs between them.

The talks on the atomic power plant have been suspended since 2010 due to wide differences on the location of the reactors, electricity prices and government payment guarantees. But the agreement to revive them suggests that Turkey is willing to make concessions on the sticking points, officials said.

On the sidelines of Lee's visit, South Korean firms also signed a memorandum of understanding with Turkey's state-run Electricity Generation A.S. on a US$2 billion first-phase project to build a coal-fueled power plant in the Afsin-Elbistan region, some 600 km south of Ankara.

In Saudi Arabia, Lee and Saudi leaders agreed to significantly bolster defense cooperation. The two sides agreed to conclude a defense cooperation pact early, possibly in the first half of the year, and establish a military attache at the Saudi Embassy in Seoul, who will be the country's first in the Far East.

On the sidelines of Lee's visit, South Korean and Saudi officials also held talks on South Korea's possible participation in a pilot project to build 10,000 homes in the Middle Eastern nation. Saudi Housing Minister Shuwaish bin Saud Al-Dhuwaihi agreed to visit Seoul at an early date to discuss the project.

The project is part of a bigger plan to build a total of 500,000 homes.

In Doha, Lee and Qatari Emir Sheikh Hamad bin Khalifa Al-Thani agreed to form a top-level cooperation mechanism handling all issues of cooperation between the two countries from oil and energy to science and technology, military and security, and green growth.

The "High-level Strategic Cooperation Committee," which the two leaders will oversee in person, is expected to help South Korean companies play greater roles in Qatar as it pursues a slew of massive development and infrastructure construction projects.

The two sides also signed a memorandum of understanding on industrial and energy cooperation. The agreement is expected to help boost cooperation in oil supplies, renewable energy development and other energy issues, while accelerating cooperation in other industrial matters.


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