South Korean President Yoon Suk Yeol gave the green light on Monday to conduct exploratory drilling for potentially vast oil and gas prospects found off the east coast of the nation that is one of the world's largest energy importers, Report informs via Reuters.
The possibility of the area containing as much as 14 billion barrels of oil and gas is "very high", Yoon told a news conference, citing a study that he said has been reviewed by experts and industry groups.
"Today, I approved the Ministry of Trade, Industry and Energy to go ahead with the drilling for exploration deep in the east sea," Yoon said.
The drilling project is estimated to cost more than 500 billion won ($363 million) and it will begin near the end of the year with the hope of producing a finding by the first half of next year, he said.
Yoon identified an area off the southeastern industrial port city of Pohang as the location.
The president said South Korea has conducted a series of explorations for oil and gas beginning in 1996 and tapped a gas reserve of the equivalent of about 4.5 million barrels. Commercial development of that reserve was completed in 2021, he said.
The new prospects are potentially large enough to contain enough gas that would fuel the country for 29 years and oil equivalent to four years of consumption, he said.
Energy stocks in Seoul jumped after Yoon's announcement.
Shares of SK Innovation were up more than 10%, Korea Gas Corporation hit the daily limit of 30%, SK Gas was up more than 17%, and Daesung Energy surged more than 27%.
South Korea is the world's fourth-largest buyer of crude and gas, according to the Korea National Oil Corporation (KNOC), and the world's ninth-largest energy consumer.
Industry and Energy Minister Ahn Duk-geun said three-quarters of the prospects is estimated to contain gas and the remaining quarter oil. Commercial production is targeted for 2035, he said.
An industry ministry official said KNOC will lead the drilling with the goal of determining the size of the prospects. Up to 10 wells may be needed to be drilled each at a cost of 100 billion won, the official said, requesting anonymity.
South Korea has minimal fossil-fuel resources and imports all but 1% each of its coal supplies, oil and natural gas. It is the world’s second-largest importer of liquefied natural gas (LNG) after Japan, and is the fifth-largest importer of oil, according to OECD data.