Abu Dhabi and South Korea have signed a memorandum of understanding (MoU) giving Seoul development rights with a production total of at least 1 billion barrels of oil, as part of a comprehensive agreement that secures the energy supply of the Asian state.

The production agreement is worth about $95bn at current market prices, according to a statement by South Korea’s presidential office.

The MoU, signed by Abu Dhabi National Oil Company (Adnoc) and Korean National Oil Company (Knoc) on 13 March, is part of a series of renegotiations of several concessions that expire in 2014.

The countries also signed a contract outlining the terms for Knoc to develop three oil fields, two located offshore and one offshore, with proven reserves of 570 million barrels, said the statement.

“If the concession agreement for the three oil fields is signed within this year, production may begin as early as 2013, likely producing as much as 35,000 barrels a day,” the statement said. South Korea can hold as much as 100 per cent of the concession for the fields.

Knoc is expected to form a consortium with other South Korean companies to execute the projects, which have a tenure of 30 years, according to a South Korean official.

As part of the MoU, South Korea secured the status as preferred buyer of 300,000 barrels of crude a day.

Abu Dhabi will be able to store 6 million barrels of crude in the South Asian state at no cost, under the proviso that South Korea can access the oil in times of crisis.

South Korea has been keen to increase its self-sufficiency ratio for oil and gas to about 15 per cent, the presidential office said. That target will be achieved if the production of the new concessions reaches 126,000 barrels a day, the country’s Knowledge Economy Ministry said in a separate statement.

Knoc laid the groundwork for the deal by signing an initial MoU on oil exploration and storage last August, and recently boosted its exploration and production capacity by acquiring Dana Petroleum for $2.6bn.

At present, Adnoc’s main production partners are the US’ ExxonMobil, Royal Dutch Shell, the UK’s BP, France’s Total and the Japan Oil Development Company. However, analysts have predicted that the new round of concessions will require more aggressive pricing, which will open the door to competitors.

The signing of the MoU coincides with a three-day visit of South Korea’s president Lee Myung-bak to the UAE, during which he will attend the groundbreaking ceremony at the nuclear power project in Braka. The $20bn contract for four nuclear reactors was awarded to Korea Electric Power Corporation (Kepco) in 2009.

South Korean engineering and construction companies have also been pushing into the UAE’s oil and gas sector, winning major deals, such as the fourth natural gas liquids train at the integrated gas development at Ruwais in 2009. Engineering, procurement and construction (EPC) contractor GS won the $2,2bn contract in a consortium with UK-based Petrofac.

That year, South Korean EPC contractors won $51bn-worth of contracts in the Middle East.