SEOUL, - South Korea and Saudi Arabia have signed preliminary agreements on investments amounting to $15.6 billion, marking a significant expansion in bilateral cooperation. This comes as part of President Yoon Suk Yeol's first state visit to Saudi Arabia and builds upon the $29 billion in agreements reached during Crown Prince Mohammed bin Salman's visit to Korea last November.
According to a news release by Yonhap News Agency, the freshly inked agreements cover a broad range of sectors, including clean energy, infrastructure, ICT, and defense. The State-owned Korea National Oil Corporation (KNOC) also signed an agreement with Saudi Aramco, allowing the two to jointly share a crude reserve of 5.3 million barrels to be stored in Ulsan, Korea, until 2028.
The expanded cooperation comes at a time when South Korea's dependence on energy imports exceeds 90 percent, amid ongoing conflicts in the Middle East. As part of the agreement with Aramco, South Korea will have the option to replace its oil imports with domestic stock for up to five years. It will also have priority to purchase Aramco stock stored in Korea under certain conditions. President Yoon's initiatives aim to enhance energy security amid rising international uncertainties.
The Middle East represents more than just an energy source for South Korea; it also provides numerous opportunities for Korean companies. Despite recording its largest trade deficit last year, Korea's exports to the Middle East increased by double digits. President Yoon is prioritizing business interests during his six-day visit to Saudi Arabia and Qatar, accompanied by leaders from 139 companies and business organizations.
During the visit, President Yoon witnessed the signing of an agreement for Hyundai Motor's first production base in Saudi Arabia and discussed Korean participation in Saudi Arabia’s $500 billion NEOM project. He also visited the historic site of Diriyah, the birthplace of the al-Saud family, and pitched for a Korean role in the $20-billion Diriyah Gate development project.
Saudi Arabia, under its Vision 2030 Initiative, aims to transition its power sources to renewable energy by 2030. With the newly signed agreements, South Korea has a pivotal opportunity to steer away from its current low-growth trajectory.