‘No longer prospective’: The firm that left Korea early after 15 years of searching for oil

Posted on : 2024-06-07 17:24 KST Modified on : 2024-06-07 17:24 KST
Australia’s Woodside Energy left the project six years early after concluding that the area Korea now claims could hold a wealth of oil and gas was “no longer considered prospective”
An image released by the presidential office on June 3, 2024, shows where oil and gas may lay off the eastern coast of the peninsula. (Yonhap) 
An image released by the presidential office on June 3, 2024, shows where oil and gas may lay off the eastern coast of the peninsula. (Yonhap) 

South Korea’s president recently announced that the floor of the East Sea has the potential to contain large amounts of underground oil and gas. But Australian energy firm Woodside Energy, which was commissioned to study the Ulleung Basin in April 2019, had previously dismissed these claims, however, saying the area was “no longer considered prospective.”  

The Korea National Oil Corp. (KNOC) commissioned Vitor Abreu, owner of the US geoscience research firm Act-Geo, to evaluate the potential for the presence of oil and gas off the East Sea in February 2023. However, it could be said that the global energy industry already made its conclusion before the study was commissioned.  

The Hankyoreh analyzed Woodside Energy’s annual and quarterly reports from 2019 to 2023, which are available on its website. The South Korean government commissioned Woodside Energy in 2007 to explore the waters around the Korean Peninsula for the presence of oil and gas. Woodside resumed its studies from April 2019 to 2023, but suddenly withdrew.  

Regarding Blocks 8 and 6-1N in the deep waters of the Ulleung Basin, Woodside's 2019 annual report said the “blocks lie in the deepwater Ulleung Basin, adjacent to a large, mature gas market.”  

Woodside Energy's 2019 annual report.
Woodside Energy's 2019 annual report.

The report said that “substantial deepwater prospectivity was identified by Woodside and joint venture partner KNOC when the acreage was held between 2007 and 2016.” It indicated that Woodside and KNOC was planning on commencing a seismic survey in Q1 2020 to “evaluate the hydrocarbon potential of the basin.”  

KNOC also issued a press release in April 2019, announcing that they would conduct a 3D marine seismic survey of Block 8 and Block 6-1N in cooperation with Woodside over a period of up to 10 years. KNOC agreed to give Woodside 50% equity regarding the Ulleung Basin’s deepwater acreage.  

Woodside and KNOC even succeeded in securing a small amount of resources. According to Woodside’s Q2 report for 2021, the joint project succeeded in acquiring 2,577 square kilometers over Blocks 8 and 6-1N.  

Woodside’s annual report for 2023, however, indicates that the firm decided to pull out of the project entirely. The project was originally scheduled to last until June 2029.  

“Woodside continued to optimize its exploration portfolio, exiting blocks no longer considered prospective. This included a decision to exit Block 5 in deepwater Trinidad and Tobago and completing formal exit activities in offshore Canada, Republic of Korea, Peru and Myanmar Block A-6,” the report stated.  

In other words, Woodside found the Ulleung project commercially infeasible.  

“The South Korean government and Act-Geo CEO Vitor Abreu need to explain in their press conference on Friday why they think a project that Woodside abandoned is still commercially viable,” said Choi Kyung-sik, a professor of earth and environmental sciences at Seoul National University. 

KNOC has continually conducted exploration activities in the East Sea for the purpose of discovering natural resources. In a press release on Dec. 10, 2014, KNOC projected the presence of “gas in the East Sea that will provide 22 years’ worth for the Gyeongsang region.”  

“Exploratory analyses regarding Gas Fields 8-9 in the East Sea, conducted before exploratory drilling, have confirmed the findings,” the press release stated.  

At the time, this release did not gain much attention, with only a few dailies covering it. Although the announcement of a “confirmed” finding before drilling even begins is suspicious, the lack of an announcement from the president or a government minister allowed the release to go under the radar.  

This time, however, Energy and Trade Minister Ahn Duk-geun and President Yoon Suk-yeol went in front of the public on Monday and declared the potential for South Korean soil to yield 14 billion barrels of resources, encouraging people to be hopeful for the future of Korean energy.  

When industry experts and the public expressed their skepticism, the Ministry of Trade, Industry and Energy and KNOC issued announcements on Thursday touting the “expertise and know-how of Act-Geo” and the “prospectivity of deepwater gas fields in the East Sea” based on “analysis.” Woodside pulled out from the project before it even began drilling, but the Yoon administration claims that this is because Woodside did not conduct the proper structural analyses.

“We have drafted new structural plans based on analyses conducted with Act-Geo’s cutting-edge technology and expertise,” they announced.  

They claim that they took the data left behind by Woodside to conduct additional exploratory analyses that enabled a new structural plan.  

Regarding Woodside’s withdrawal, the administration has pointed out that Woodside decided to pull out in July 2022, but after the firm merged with BHP in January 2023, there was a move to conduct another comprehensive review of the project. Abreu and the South Korean government were slated to hold a press conference on Friday, where they are expected to offer some explanations.  

Vitor Abreu, owner of the US geoscience research firm Act-Geo, arrives in Korea on June 5, 2024. (pool photo) 
Vitor Abreu, owner of the US geoscience research firm Act-Geo, arrives in Korea on June 5, 2024. (pool photo) 

By Choi Woo-ri, staff reporter; Lee Wan, staff reporter 

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

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