The South Korean president is set to visit the UAE next week, following a bumper year when trade between the two countries increased by nearly a quarter to reach US$22.1 billion.
Trade boom for UAE and South Korea tops $22 billion
Trade between the UAE and South Korea climbed by more than 24 per cent to US$22.1 billion (Dh81.1bn) last year amid high oil prices and cooperation between the two nations in areas from energy to security.
What is more, construction contracts won by South Korean companies in the Emirates totalled $25.6bn in 2010, making the UAE the most lucrative nation for Korean contractors, according to figures from the South Korean Embassy in Abu Dhabi.
Amid the boom in trade, Lee Myung-bak, the South Korean president, is set to visit the UAE for energy talks next week as the country with few natural resources seeks more access to oil reserves in the Gulf. He is also due to tour Turkey, Saudi Arabia and Qatar, starting on Saturday, the president's office said yesterday.
South Korea has emerged as a major UAE partner in strategic arenas including nuclear energy and military training, and oil forms the foundation of their relationship.
Amid the threat of reduced supplies from Iran, pressure is growing for South Korea to secure energy supplies. Korea National Oil Corporation has said it is targeting spending up to $4bn this year to win concessions.
"The South Korean government is concerned to increase the country's oil and gas self-sufficiency ratio," said Tom Grieder, an East Asia energy analyst at IHS Global Insight. "Securing upstream reserves for South Korean companies helps them to reduce exposure to high crude oil import costs."
The South Korean president's visit comes two weeks after the nation's prime minister secured a pledge from the UAE to help to secure stable oil supplies.
Among the items of Mr Lee's agenda are finalising the terms of a deal with Abu Dhabi granting Seoul a stake in an oil concession with as much as a billion barrels of reserves. The deal, struck during the president's last visit in March, did not specify the fields or nature of royalty payments.
South Korea and its neighbours China and Japan are in a race for access to Gulf reserves as they seek energy security and shelter from volatile crude markets. This month Wen Jiabao, the Chinese premier, oversaw the signing of a deal in Abu Dhabi with the emirate's national oil company and a Chinese counterpart. In October the trade minister of Japan, the emirate's first crude customer, was in the capital to negotiate the renewal of oil concessions.
The UAE's exports to South Korea rose 21.3 per cent last year to reach $14.8bn thanks to climbing oil prices, while South Korean imports grew 32 per cent to $7.3bn, a total of $22.1bn, according to the South Korean Embassy in Abu Dhabi.
Much of that trade is bankrolled by South Korea's two export credit agencies, including a $20bn contract Abu Dhabi awarded in 2009 to a consortium form the Asian country to build and operate four nuclear reactors.
Since then South Korean nuclear energy professors have taken up posts at the emirate's Khalifa University and Emirati engineering students have visited Seoul to learn about the nuclear industry.
The cooperation extends to renewable energy, including the arrival of a South Korean "green economy" agency to Masdar City, the emirate's planned carbon-neutral development.
"With the crisis happening in Europe, of course they're shifting their interest to the GCC and Iraq and Turkey," said Mohammad Harfouch, the executive director of a South Korean trade exhibition in Abu Dhabi. "They look for safe and secure places and that's why the UAE is a good destination."
Mr Harfouch spoke from Seoul, where he and officials from the Ras Al Khaimah Free Zone hoped to entice small to medium businesses in sectors including fashion and health care to set up in the UAE.