By Kim Hyun-cheol
Staff Reporter
A dispute between Korea and Iraq over oil exploration appeared to be all but over following the recent visit by the Iraqi president but it's not yet time for a sigh of total relief, according to experts.
Seoul announced Tuesday it signed an MOU with Iraq to take part in a $3.6 billion oil field exploration project in southern Iraq. Under the agreement, Korea will offer $3.6 billion in construction aid for infrastructure in the war-stricken country, and will be allowed to join the oil fields project in the Basra region, following a summit between President Lee Myung-bak and President Jalal Talabani, the first Iraqi leader to visit here, who arrived Monday for a four-day visit with 60 government officials and business representatives.
``Overall prospects are good, but that doesn't mean Korea will get what it needs there quickly,'' said Prof. Yoo Wang-jong of Sungkyul University said. ``Unlike previous visits by the leader of the Kurdistan government, this is an official visit by the national leader,'' a reference to Iraqi geography and its state of fragmentation.
The northern portions of the country are under Kurdish control, while the oil-rich south is primarily controlled by the central government. SK Energy, Korea's largest refiner, faced trouble last year when it tried to cut deals with the Kurds, but thanks to rapprochement since Talabani's visit, SK has been allowed to go on with its business in the south but at the cost of its business in the Kurdish-controlled areas. Korea Gas Corp. was excluded from the deal.
Prof. Yoo said that it was a strategic decision to go for better deals but it may raise Kurdish ire. However, Talabani is a Kurd, a fact that Korean refiners hope will help them get the best of both worlds.
Prof Seo Jeong-min of Hankuk University of Foreign Studies said it was too early to regard the deal as complete, considering Iraq's political system.
``It's Prime Minister Nuri Kamal al-Maliki, rather than Talabani, who actually runs the country. Without ratification from parliament, the deal could lead nowhere,'' Seo said.
Yoo agreed the diplomatic ability of the Iraqi president was the key to Korea's success, but was optimistic about the agreement.
``It was an official agreement between the two countries' central governments. It cannot be a mere scrap of paper in the end,'' he said.
A Seoul official said the agreement is no doubt a hopeful sign for relations between the two countries.
``The MOU means the discomfort between South Korea and Iraq has greatly diminished,'' Kim Young-hak, a vice minister at the Minister of Knowledge Economy, said during Tuesday's briefing.
Korea and Iraq have not been on good terms in recent years due to Korea joining a series of oil projects in northern Iraq, which is controlled by the Kurdish government.
The central government in Baghdad said any deals with the Kurdistan administration were ``illegal.'' and that no companies would be allowed to win any bids in Iraq.
In defiance of the central government's warning, the Kurds signed several oil deals with global companies over the past couple of years, including SK and the Korean National Oil Corporation. Consequently, SK had been banned from importing crude oil from the Middle Eastern country since January last year.
Oil shipments resumed from Iraq last month, and the refiner earned the chance to re-enter the bidding for an oil and gas fields exploration project in southern Iraq on the condition that it take no further part in any projects in northern Iraq.