S Korea: what price nuclear exports? | beyondbrics | News and views on emerging markets from the Financial Times – FT.com

South Korea is whooping with delight that it has signed a preliminary contract to develop 1bn barrels of oil reserves in the United Arab Emirates, winning the deal by using the leverage of its $20bn project to build nuclear reactorsthere. But is it really all good news?

It’s certainly a big step for Seoul, which insists the final contract – due for conclusion next year – will lift its oil sufficiency to 15 per cent from 10 per cent now. The Korea National Oil Corporation has never won a project of this scale so it represents a huge vote of political confidence from the UAE.

So far, KNOC’s moves to acquire greater reserves and know-how have generally taken the form of mergers and acquisitions, buying Britain’s Dana Petroleum last year and Canada’s Harvest Energy in 2009. Korea’s diplomats and oil men have to be saluted for convincing the Emiratis that they are ready for such a big upstream concession. Korea is the world’s fifth-biggest crude importer and its relationship with the world’s third-biggest exporter seems to be going from strength to strength. So far, so good.