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SEOUL, Oct 25 (Reuters): State-run Indian Oil and Natural Gas Corp. (ONGC) has entered talks with Korea National Oil Corp. (KNOC) over the possible use of Korea's oil storage tanks, a senior official at Korea's energy ministry said today.
South Korea, which imports all of its crude needs, has been actively seeking oil storage leasing deals to secure wider sources of supplies and reduce its heavy reliance on the volatile Middle East, where almost 80 per cent of its crude is sourced.
India, which has surpassed South Korea as Asia's third- largest oil consumer, is keen to engineer oil swaps with other big importers in order to cut down shipping costs on its growing imports from more distant sources.
ONGC has a stake in Russia's giant Sakhalin-1 oil and gas field, which started pumping oil a month ago and will reach its full 250,000 barrels per day (bpd) capacity by the end of 2006.
"It's a win-win strategy for both sides," Lee Won-gul, South Korea's vice energy minister, told Reuters by telephone. He said details such as how much capacity ONGC wants to use had not been finalised.
Energy Minister Lee Hee-beom will visit India sometime in November, he said.
The ONGC talks follow a series of joint oil-stockpiling deals secured by South Korea this year with China's state trader Chinaoil, Norwegian oil and gas group Statoil and Algerian state oil firm Sonatrach.
Deputy energy minister Oh Young-ho told Reuters in September Saudi Arabia was one of two countries with whom South Korea was discussing possible joint stockpiling.
The stockpiling deals give South Korea pre-emptive rights to buy the crude in storage in case of emergency.
South Korea, the world's fourth-biggest crude oil buyer, is steadily expanding its oil storage facilities, with overall capacity rising by about 14.6 million barrels this year to 113.7 million barrels.
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