In a move to boost its energy security, South Korean President Yoon Suk Yeol has approved the exploration of potentially vast oil and gas prospects off the country’s east coast. According to Yoon, there is a “very high” possibility that the area contains as much as 14 billion barrels of oil and gas.
The exploratory drilling project, with an estimated cost of over 500 billion won ($363 million), is set to begin near the end of this year. The goal is to find energy reserves by the first half of 2024. The prospects are located in South Korea’s Exclusive Economic Zone, off the southeastern industrial port city of Pohang.
Yoon stated that South Korea’s previous exploration efforts since 1996 have tapped gas reserves equivalent to about 4.5 million barrels, with commercial development completed in 2021. The new prospects, if successful, could provide enough gas to fuel the country for 29 years and oil equivalent to four years of consumption.
The news has already had a positive impact on South Korea’s energy stocks, with shares of oil refiner SK Innovation, Korea Gas Corporation, Daesung Energy, and SK Gas all seeing significant gains.
While the potential volume of the oil and gas reserves is substantial, experts emphasize that the actual extraction and commercial viability will only be known once the drilling commences. Readul Islam of Rystad Energy stated that “only spinning the drill bit will reveal how much oil and gas is actually present.”
However, if successful, the project could have significant benefits for South Korea, the world’s third-largest importer of liquefied natural gas (LNG). Any significant volumes of gas found could help reduce the pressure on global LNG producers to meet the increasing demand for the fuel.
South Korea is the world’s fourth-largest buyer of crude and gas, and the ninth-largest energy consumer. With minimal domestic fossil fuel resources, the country imports all but 1% of its coal, oil, and natural gas supplies. This latest exploration project is a critical step in the country’s efforts to enhance its energy security and reduce its dependence on imports.