(News Focus) Potential discovery of offshore gas, oil reserves raises hopes, but feasibility still uncertain

President Yoon Suk Yeol's approval to begin exploratory drilling for the possibility of gas and oil reserves off the nation's east coast raised hopes for South Korea, one of the world's biggest energy importers, but more research is needed to assess the feasibility, officials said Monday. Earlier in the day, Yoon said that South Korea will push to embark on an oil and gas exploration project in the East Sea after a study suggested significant oil deposits may be buried in the deep sea off the coast of Yeongil Bay in Pohang, about 260 kilometers southeast of Seoul. The results came after the government requested the U.S.-based research company Act-Geo to conduct the study in February last year, which reported that the deposits could hold between 3.5 billion and 14 billion barrels of gas and oil. The government says gas makes up 75 percent of the reserves, with crude accounting for the remaining 25 percent. "The potential for the project is very high, with global resource development companies with signifi cant experience and know-how expressing their intention to participate," Industry Minister Ahn Duk-geun said during a briefing held at the presidential office. "The geophysical exploration has been completed and verified. Now, we need to carry out drilling operations to assess the amount," Ahn added, noting that detailed follow-up measures will be released in the near future. The latest discovery is significant, as South Korea depends on imports for around 97 to 98 percent of its energy needs. Once confirmed, the quantity would be theoretically sufficient to meet the country's gas and oil demand for up to 29 years and four years, respectively. Additionally, South Korea could potentially secure profits by selling the resources overseas. The government estimated that the value of the reserves could be as high as five times the market cap of Samsung Electronics. The top tech giant has a market cap of 451.9 trillion won (US$328.2 billion). "When we calculate using average import prices, 14 billion barrels of gas and oil are worth around $1.4 trillion. However, we do not think it is appropriate to place much significance on these numbers," a ministry official said. The government officials also noted that further steps are needed to assess the actual value of the potential reserves. "We need to conduct drilling operations to determine if the resources exist. Until we complete this process, we cannot confirm the presence or absence of gas and oil," the official added. South Korea has been conducting exploration projects in local waters since 1966 in search of resources, though there have been only a few successful discoveries over the years. In 1998, South Korea discovered a gas reserve containing 45 million barrels in waters near Pohang, leading to commercial excavation from 2004 until 2021. The gas reserve generated a net profit of 1.4 trillion won over the 17 years of operations, falling below market expectations. A government official also noted that the project is expected to be costly, considering the re serve lies around 1 kilometer underwater. "Drilling one spot costs over (US$72.6 million), and success is not guaranteed. However, we are committed to making our best efforts to support the project through coordination with related ministries and parliament," the official said. The official noted that the drilling operation has an expected success rate of around 20 percent, meaning 1 out of every 5 holes drilled will be successful. South Korea plans to carry out the first drilling operation by the end of this year, with the result expected to be released in the first half of next year. The country plans to join forces with U.S. or European partners with equipment and technologies for the deep water operations. Ahn, meanwhile, said that preparations for commercial drilling are expected to begin once the actual deposits are confirmed, with construction expected to start around 2027-2028. Commercial development is anticipated to begin around 2035, he added. The reserves are located within South Korea's exc lusive economic zone, meaning excavation does not require cooperation with other countries. Source: Yonhap News Agency