Daewoo International Corp. and STX Energy Co. are set to take part in a government project to extract natural gas from the continental shelf in the East Sea to secure stable energy supplies and tackle price swings.
The Ministry of Knowledge Economy said it struck an agreement on Thursday with the two Korean developers to drill natural gas from seabed deposits, which are believed to hold 20 million tons of gas, or 56.6 million cubic meters.
Under the deal, Daewoo will inject $70 million together with the Korea National Oil Corp. over the next eight years to develop the southern part of the 6-1 block. Daewoo has a 70 percent stake and the KNOC the remainder.
The state-run miner will also work with STX in the mining lot’s central area with a joint investment of $60 million with a share ratio of 70 to 30.
“Each of the central and southern part of the block is projected to have a 10-million-ton gas reserve,” the ministry said in a statement.
The deal makes Daewoo and STX the first private firms allowed to dig up the country’s seabed more than 40 years after the government embarked on its resources search, the ministry said.
Korea, which imports nearly all its energy needs, have been scouting across the country for mineral reserves since 1970 but most attempts have not led to production.
In 1998, the government first discovered an offshore deposit in the East Sea and began production in 2004 with a daily capacity of 1,000 tons of gas and 1,000 barrels of ultra-light crude oil.
It has also teamed up with businesses for overseas mining as prices of raw materials have surged in recent years in line with demand from emerging economies like China and India.
Daewoo International, a POSCO-affiliated trading house, has been scaling up its mineral business. It currently has stakes in projects involving oil and gas in Myanmar, Vietnam and Peru, nickel in Madagascar and coal in Australia.
STX Energy, a unit of the Korean shipbuilding giant, is another aggressive miner. It is engaged in onshore oil fields in Alabama, the United States, a gas project in Uzbekistan, a coal mine in China and an iron ore field in Australia.
In August last year, the Seoul-based company acquired a gas field for 174 billion won ($147.8 million) from EnCana Corp., Canada’s top natural gas producer.
By Shin Hyon-hee (email@example.com