South Korean President Yoon Seok-yeol on Monday approved exploratory drilling at a potentially huge oil and gas prospect discovered off the east coast of South Korea, one of the world’s largest energy importers.
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South Korean President Yoon Seok-yeol on Monday approved exploratory drilling at a potentially huge oil and gas prospect discovered off the east coast of South Korea, one of the world’s largest energy importers.
Yoon told a news conference that the likelihood that the area holds as much as 14 billion barrels of oil and gas is “very high,” citing a study he said had been reviewed by experts and industry groups.
“Today, I approved the Ministry of Industry, Trade and Energy to continue drilling and exploration in the depths of the East China Sea,” Yoon said.
He said the drilling program, estimated to cost more than 500 billion won ($363 million), would begin by the end of this year, with the hope of reaching a conclusion by the first half of next year.
Yoon identified an area near the southeastern industrial port city of Pohang as the location.
The president said South Korea has conducted a series of oil and gas explorations since 1996 and has developed natural gas reserves equivalent to about 4.5 million barrels. Commercial development of the reserve was completed in 2021, he said.
He said the new exploration area could be large enough to contain natural gas enough for the country to use for 29 years and oil equivalent to four years’ consumption.
Seoul energy stocks rose sharply after Yoon announced the news.
SK Innovation’s stock price rose by more than 10%, Korea Natural Gas Company’s stock price rose by 30%, SK Gas rose by more than 17%, and Daesung Energy soared by more than 27%.
South Korea is the world’s fourth-largest buyer of crude oil and natural gas and the world’s ninth-largest energy consumer, according to KNOC.
Industry and Energy Minister Ahn Duk-geun said three-quarters of the mine is expected to contain natural gas and the remaining quarter contains oil. Commercial production is targeted for 2035, he said.
An industry ministry official said KNOC will lead drilling activities with the goal of determining the size of exploration prospects. The official, who spoke on condition of anonymity, said as many as 10 wells may need to be drilled at a cost of 100 billion won each.
South Korea has the smallest fossil fuel resources, except for 1% of coal, oil and natural gas. It is the world’s second-largest importer of liquefied natural gas after Japan and the fifth-largest oil importer, according to the OECD.
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