SEOUL - A South Korean consortium Thursday signed an initial agreement to explore oilfields in Iraqi Kurdistan in return for major construction projects in the region, officials said.
The memorandum of understanding was signed by visiting Kurdish Prime Minister Nechirvan Barzani and a consortium led by the state-run Korea National Oil Corporation (KNOC).
The oilfields are believed to hold one to two billion barrels compared to South Korea's total annual imports of some 800 million barrels, a KNOC spokesman said.
"We expect the deal to greatly contribute to securing energy sources for South Korea, as well as laying the ground for entering the construction market in the war-torn nation," the corporation said in a statement.
South Korea imports almost all its oil and gas and is actively seeking worldwide exploration deals and stakes in foreign energy firms.
The deal, the second of its type in the region, went ahead despite protests from Iraq's central government about exploration projects in Kurdistan which have not been approved by Baghdad.
Iraq last month suspended an annual contract with South Korea's top oil refiner to export 90,000 barrels a day after Seoul agreed in November with Kurdistan to explore the Bazian field -- estimated to contain 500 million barrels.
The latest deal calls for the consortium to build roads and other public facilities in the autonomous region in return for obtaining the rights to explore four oilfields.
President-elect Lee Myung-Bak met Barzani Thursday and pledged to support economic reconstruction and development in the Kurdish region and elsewhere in Iraq.
"I'm convinced Korean enterprises will greatly support the region's development in the future," Lee was quoted as telling Barzani at the meeting.
"The Kurdish area is rich in oil resources. I hope the regional government will continue to give a lot of business opportunities to Korean companies."
Barzani thanked South Korea for sending troops to the Kurdish region for reconstruction projects, according to Lee's aides.
Seoul has about 600 troops stationed there. Under the current timetable they are due to leave at the end of this year.
The move, however, is expected to anger Iraq’s central government who demanded that oil, gas and other natural resources should remain Iraqi treasures and not be allowed to be signed away by regional authorities.
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