President Yoon Suk Yeol speaks in a briefing over the potential of vast oil and gas deposits in the East Sea at the presidential office in Seoul on Monday. (Yonhap)
South Korea has approved a large-scale project to carry out exploration drilling of potentially massive gas and oil reserves, which could hold up to 14 billion barrels of gas and oil in the deep sea off the country’s southeastern coast, President Yoon Suk Yeol announced Monday.
Yoon highlighted that the maximum amount of buried gas and oil would be enough for the country to use for 29 years and four years, respectively.
He said the government entrusted Act-Geo, a top global deep-sea technology consultancy based in the US, with the in-depth review of the geophysics study on the vast prospects of the natural resources in February last year, adding that leading institutes and experts verified the potential of the “14 billion barrels of gas and oil” buried in the reserve off Yeongil Bay in Pohang, North Gyeongsang Province.
According to officials at the Industry Ministry, the review from Act-Geo reported that the buried amount of natural resources could be somewhere between 3.5 billion and 14 billion barrels.
“From now, it’s a stage where we move onto exploration drilling that can confirm whether the oil and gas actually exist and how much is reserved,” Yoon said in a briefing at the presidential office in Seoul.
“We have to drill at least five boreholes, each costing over 100 billion won ($73 million). Top global energy development companies are already showing interest.”
The president added that the first borehole project will begin at the end of this year and the results are expected to be announced by the first half of next year.
Industry Minister Ahn Duck-geun told reporters that if the deposits are confirmed, the government expects to begin the construction of commercial drilling facilities between 2027 and 2028, which would be on pace to allow commercial development of the site in 2035, adding that it is difficult to pinpoint any timelines because the reserves must be checked first.
“In terms of potential amount, there is an enormous amount and we estimate that one-fourth of it is oil and three-quarters is gas,” said Ahn, noting that it could be the largest reserve in the world among deposits found in the deep sea, or over 600 meters below water.
Asked about the total cost of exploration drilling, Ahn refrained from giving a fixed figure due to remaining uncertainties, but mentioned that the previous cost of developing a gas field that had 45 million barrels of gas was about 1.2 trillion won.
Korea discovered its first gas field in the East Sea in 1998. The Korea National Oil Corp. began the commercial production of the gas field between 2004 and 2010, posting a revenue of 2.6 trillion won during the period.
For the maximum value of the deposit, Ahn said it could be worth over five times Samsung Electronics’ market capitalization, which equaled 452 trillion won at Monday's closing. That would be roughly $1.6 trillion.
The shares of numerous companies in the gas and oil sectors jumped on the news of the massive natural resource prospects in the East Sea. The stocks of the Korea National Oil Corp., Daesung Energy, Dongyang Steel Pipe and Korea Gas Corp. hit the upper limit for prices, with nearly 30 percent hikes from the previous trading day.
Pro-environmental civic groups criticized the Yoon administration's exploration drilling decision. The climate activists pointed out that it would be impossible for Korea to achieve carbon neutrality by 2050 if the boreholes get going after 2035, as they could produce for about 30 years, citing the International Energy Agency's advice to prohibit oil and gas development after 2021 for the goal of carbon neutrality in 2050.
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