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South Korea Opens New Frontier Region to Offshore Drilling

iStock image of a rig
iStock

Published Jun 3, 2024 4:28 PM by The Maritime Executive

South Korea's government has opened the door to drilling for oil and gas E&P off the country's eastern coastline, launching what could be a strategic new source of energy for Asia's fourth-largest economy. 

The prospect off the coast of Pohang could contain up to 14 billion barrels equivalent of oil and gas, according to President Yoon Suk Yeol. This is enough to supply four years of national oil consumption and 29 years of gas demand. It will be explored by American consultancy Act-GEO for Korea's Ministry of Trade, Industry and Energy, with a budget of about $360 million. 

The objective of the campaign is to prove out the frontier region's potential by mid-2025. With leasing, permitting and the FEED process, any production could take up to a decade to bring online. 

South Korea imports about 90 percent of its carbon-based energy, including 98 percent of its natural gas; it ranks in the top five importing nations for both LNG and crude. New domestic production would allow it to reduce its dependence on foreign suppliers. It would also potentially reduce a key source of demand for globally-sourced LNG, freeing up volumes that could supply other top consumers like the EU and Japan. 

While the prospects of the new offshore region are far from certain, Yoon's announcement sent the stock prices of Korean gas companies soaring as investors scrambled to capitalize on the new opportunity. Shares in Korea Gas Corp. rose 30 percent in a day, the maximum allowed by exchange rules. SK Gas briefly jumped by 29 percent, then closed the day at a still-healthy increase of seven percent.