ED Potential energy reserves
President Yoon Suk Yeol took it upon himself to announce that Korea will embark on exploratory drilling later this year, following the identification of potential reserves of up to 14 billion barrels of crude oil and natural gas off the coast of Pohang, North Gyeongsang Province.
Research has indicated the possibility that 75 percent could be made up of gas and the other 25 percent oil, government officials also said Monday. It was the president's first briefing on state affairs directly to the assembled press, which he has vowed to do more often.
The potential reserves are projected to provide 29 years' worth of natural gas and four years of oil. Given Korea's heavy reliance on energy imports, the financial value of this discovery is estimated at 2, 255 trillion won ($1.64 trillion), approximately five times the market capitalization of Samsung Electronics.
If successfully tapped and commercialized, the reserves off Yeongil Bay in Pohang, which is located within Korea's exclusive economic zone, would reduce the country's energy dependence. At a time when countries around the world are striving to secure energy security as well as raw materials, if these prospects materialize, the benefits would be considerable. Reuters noted that Korea imports nearly all of its supplies of coal, oil and natural gas, with only a negligible 1 percent being domestically sourced.
Despite the promising announcement by the president, the path forward remains lengthy and uncertain. The revelation was based on findings from a geophysical survey conducted by a U.S. firm. Typically, the development of oil and gas fields progresses from a geophysical survey to exploration drilling and ultimately commercial development. The true extent of the underground resources must be confirmed through exploratory drilling, each of which can cost as much as 100 billion won. If confirmed, commercial development can start around 2035, the government said.
Korea's endeavors to establish itself as an oil-producing nation have been marked by intermittent progress spanning over six decades. While it has limited experience in developing natural gas and oil fields, notable projects include the 1978 joint venture with Japan, known as Block 7, from which Japan withdrew in 1986 due to economic feasibility concerns. However, the success of the 1998 East Coast gas field development was a milestone, with 45 million barrels of gas produced from 2004 to 2021, briefly elevating Korea onto the roster of energy-producing nations.
The government's estimation of a 20 percent success rate for the new drilling project off Yeongil Bay indicates a relatively optimistic outlook. Unlike the 1998 East Sea gas field, situated on the continental shelf, the potential reserve off the coast of Yeongil Bay is located in the deep sea approximately 1 kilometer below the surface. This presents a considerable challenge, requiring the utilization of significantly more advanced technology for successful exploitation.
The government's hasty announcement raised concerns, especially as it coincided with the first state affairs briefing following the ruling People Power Party's defeat in the April 10 general elections. Criticism emerged from opposition parties who questioned the premature disclosure before the project's economic feasibility was confirmed. Spokesman Lee Hae-sik of the main opposition Democratic Party of Korea voiced apprehension, suggesting the announcement might be an attempt to bolster the president's declining approval ratings. Since the general elections, with the opposition bloc now holding 192 seats in the new Assembly, the president's approval rating has only marginally recovered, hovering around early 30 percent on Monday.
Nevertheless, with alliances shifting and competition heating up in the global race to secure raw materials and energy and stabilize supply chains, the possibility of an energy source that may well be commercially developed in Korea, will enhance its economic confidence even as the world moves away from carbon-generating energy. What the government needs to do is fully debrief the public on the outcome of the following development processes, and wait calmly for concrete results.