hankyoreh

Seoul has a keen interest in joint development of North Korea’s oil fields. With the prospect of rich oil reserves and increased inter-Korean cooperation, the South proposed to launch joint oil and gas development projects at the the second inter-Korean summit, which took place from October 2 to 4. The North, however, seems to have little enthusiasm for the idea and the prospect could be further hindered by China, which already has a development deal with the North.

At a briefing on October 5, Deputy Prime Minister and Minister of Finance & Economy Kwon O-kyu said, “During the summit in Pyongyang, Chairman Kim Jong-il was the first to show a lot of interest in the oil field and gas development projects proposed by the South and we also expressed interest (in the development of North Korean oil fields).” He added, “As we have confirmed that both leaders have an interest in this, we will discuss the details at the Joint Committee for Inter-Korean Economic Cooperation, to be headed by deputy prime minister-level officials.”

Three continental shelves in Seohan Bay, Donghan Bay and Onju and Gilju near Pyongyang are presumed to be areas potentially having oil fields. Among the three areas, Seohan Bay is considered to be the most likely to have one.

Lee Jae-ung, an official of the Korea National Oil Corporation, said, “The tuff layer and geological features of Seohan Bay are almost identical to those of Bohai Bay, in which China found an oil field with about 5-6 billion barrels of oil. It is possible that Seohan Bay and Bohai Bay are linked to each other.”

North Korea has examined the possibility that a basin of Seohan Bay has held an oil deposit for a long time. The North conducted joint surveys in the area in the late 1980s with Meridian Energy Limited, a New Zealand-based electricity provider, Beach Petroleum, an oil and gas exploration company based in Australia, and Taurus Energy, a Swedish oil and gas exploration company, but did not find oil fields there. At present, a Singaporean company is the only foreign firm to take part in the joint surveys with North Korea as mining-right holder in North Hamgyeong province.

Experts only can guess about the oil reserves in the Seohan Bay area. The North maintains that up to tens of billions of barrels of oil are being held there, much more than the 5 billion barrels buried in Indonesia, which has the largest oil reserve in Asia. It is presumed that oil fields found at Bohai Bay have about 5-6 billion barrels of oil.

Oh Jeong-gyu, an official of the Ministry of Commerce, Industry and Energy, expressed doubts about the figure suggested by the North, saying that the exact size of the oil fields will be known once they can be explored using satellites or by actually investigating and drilling on site.

It is not yet clear whether the South will be able to participate in the development of the Seohan Bay oil fields. The North appears to be burdened by the South’s interest in the joint development project. For this reason, the South and the North were not able to have in-depth discussions on the issue during the second summit, according to some sources. Another problem is due to the fact that the western marine areas off Seohan Bay and the northwestern side of the mouth of the Yalu River are under the sovereignty of China. Moreover, China and the North signed a treaty in December 2005 to jointly develop oil fields in these waters. Were the South and the North to officially launch a oil field development project, it could cause diplomatic problems with China.

Please direct questions or comments to [englishhani@hani.co.kr]