‘Major global oil companies interested in joining East Sea oil, gas field project’

Major global oil companies are expressing interest in participating in an oil and gas field development project in the East Sea, where the government estimates up to 14 billion barrels of gas and oil reserves are buried, according to Kim Dong-sub, CEO of the Korea National Oil Corp. (KNOC), Wednesday.

“Even before KNOC sent out business flyers, several major global oil companies had already expressed interest. As a result, we plan to hold business briefings for these companies,” Kim said during a press conference in Sejong.KNOC is a state-run company responsible for overseeing oil and gas field operations.

On June 3, President Yoon Suk Yeol announced after an expert analysis that there is a possibility of at least 3.5 billion barrels to a maximum of 14 billion barrels of oil and gas buried under Yeongil Bay in the East Sea, off the coast of Pohang, North Gyeongsang Province.

KNOC and the government plan to conduct the first exploratory drilling of the potential gas and oil field starting in December. This process is anticipated to last around four months and cost approximately 100 billion won ($72.4 million). Following the exploratory drilling, the government intends to disclose information in the first half of 2025 regarding the presence of oil and gas reserves and the specific quantities discovered.

The government and the oil corporation believe that the participation of major global oil companies, equipped with extensive development experience and financial resources, is essential. This is because Korea lacks technical expertise in developing deep-sea oil and gas resources.”In order for our country to take the lead in this project, we are inducing the participation of many companies. We require companies with substantial experience in deep-sea exploration, as we currently lack significant expertise in this area,” Kim said.

The CEO said that the process of attracting investment starts with sending an official business flyer, and entering into a non-disclosure agreement (NDA) with interested companies to grant them access to data on the potential gas and oil field for approximately one to two months. Subsequently, it takes an additional two months to select a preferred bidder and negotiate a contract, culminating in the signing of a deal.

Kim added that in early May, KNOC signed an NDA with one major oil company and proceeded to share some data. Including this company, a total of five companies have expressed their intention to participate in the project.

Based on his remarks and the investment attraction procedure outlined, the first exploratory drilling scheduled for December is anticipated to be conducted by the government and KNOC independently, without initial investment from overseas major companies.The government plans to undertake necessary procedures, such as delineating mining areas, before seeking investment from overseas companies.

“Our country’s current systems were not designed with the assumption of large-scale natural resources. Therefore, developing under these systems could lead to a situation where companies with overseas investments receive unilateral benefits,” Ahn Duk-geun, minister of Trade, Industry and Energy told reporters, Monday. “So it is necessary to promptly and rationally reorganize the domestic systems.”