South Korea and Nigeria negotiate an oil-rail deal
By Choe Sang-Hun / International Herald TribunePublished: November 6, 2006
SEOUL: South Korea signed a preliminary $10 billion contract Monday to build a railroad in Nigeria in return for a stake in the African country's oil fields, officials said.
The deal is the latest in a trend among energy-hungry Asian investors' signing deals to build roads, power plants and other industrial infrastructure in Africa to win better access to energy sources.
The minister of commerce, industry and energy of South Korea, Chung Sye Kyun, and Oil Minister Edmund Daukoru of Nigeria signed a memorandum of understanding shortly after Presidents Roh Moo Hyun of South Korea and Olusegun Obasanjo of Nigeria met here.
Under the deal, South Korea would provide long-term, low-interest loans to help Nigeria cover part of the estimated $10 billion necessary to rebuild the railroad, the South Korean Ministry of Commerce, Industry and Energy said. The tracks would cover 1,500 kilometers, or 930 miles, and connect Port Harcourt, on Nigeria's west coast, to Maiduguri, in the east, the ministry added.
South Korea, which imports all of its oil, was promised an advantage in buying an unspecified stake in Nigerian oil fields. Posco Engineering & Construction and Korea National Oil formed a consortium to carry out the South Korean side of the deal. Construction may begin as early as in the first half of 2007 after the two countries sort out details, including the size of the oil blocks for South Korea and the terms for commercial loans for Nigeria.
The South Korean government said of the deal, "This is a win-win project where South Korea's technology and Nigeria's resources are swapped."
A spokesman said: "President Roh asked the Nigerian government to help South Korean firms participating in Nigeria's petroleum and gas field development. President Obasanjo asked our government to urge South Korean companies to participate in Nigerian projects to build hydroelectric dams, railroads and other infrastructure"
Roh visited Nigeria in March seeking a share in Nigeria's oil and natural gas development. Obasanjo plans to attend the opening of the first Korea-Africa Forum in Seoul on Tuesday. Among other African leaders expected to attend are Denis Sassou-Nguesso, president of the Congo Republic; Jakaya Mrisho Kikwete, president of Tanzania; John Agyekum Kufuor, president of Ghana; and Thomas Boni Yayi, president of Benin.
The forum takes place as South Korea seeks closer cooperation with African countries for their natural resources and potential markets for South Korean goods. South Korea started exploring oil reserves in Benin in 2004. In March, Korea National Oil won the exploration rights for two offshore blocks in Nigeria.
Nigeria sold 16 oil licenses in May in return for promises by mostly Asian investors, largely Chinese and Indian companies, of $20 billion of investment in refining, power and other projects. Nigeria is to hold bidding for 60 blocks that will be the last by Obasanjo's government before he steps down next year.
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