Under the terms of the agreement, the US will ensure a stable supply of fuel for South Korea’s nuclear reactors while South Korea can enrich uranium to produce non-weapons grade nuclear fuel.
The deal, which is due to secure Congress approval, will enable South Korea to research a nascent nuclear-reprocessing technology, known as pyroprocessing, to allow for nuclear energy production without separating plutonium, Reuters reported.
The new 20-year deal will replace an agreement signed in 1972 by the US to provide nuclear fuel and technology.
Although the 1972 agreement was initially to expire in March 2014, the allies extended the deadline to March 2016 to allow more time for the negotiations.
The new agreement will enable South Korea to promote its policy of exporting nuclear power plants.
The country will also have the right to transfer the US-made nuclear material and equipment to third countries without authorization.
South Korea, however, cannot reprocess its spent fuel.
US Nuclear Energy Institute supplier and international programs vice-president rom Daniel Lipman said: "The economic benefits include US exports to South Korea, US exports to third countries to supply South Korean projects and joint ventures, imports of materials from South Korea to supply projects in the United States, and a variety of joint R&D projects.
"South Korea’s continued use of U.S.-based technology and the continued direct involvement of U.S. personnel in South Korea’s growing nuclear industry also will help assure that its nuclear safety continues to meet the highest standards."
The Obama administration has sent a similar deal with China, earlier this week, for the approval of the Congress.
