Multiple foreign companies, including British Petroleum (BP), have bid on the investment attraction for the East Sea offshore block conducted by the Korea National Oil Corp. (KNOC). KNOC plans to select a preferred negotiator among the bidding companies after reviewing the proposals with its investment attraction advisor. As the first drilling in the promising Daewang Whale structure was confirmed to be uneconomical, the second drilling is expected to be attempted in other promising structures.
On Sept. 21, KNOC announced that more than two foreign companies participated in the bid for shares of the East Sea deep-sea oil field submarine concession rights, which closed at 3 p.m. on Sept. 19.
Previously, KNOC initiated a share rights bid in March for the second drilling of the East Sea deep-sea oil field. With the government budget completely cut and KNOC lacking sufficient technology to proceed alone, it was decided to receive investment from overseas oil development companies. KNOC has decided not to disclose the specific details of the bidding companies until the preferred negotiator is finally selected, to enhance the fairness of the bidding process. However, considering the bidding conditions set by KNOC, there is a possibility that companies like BP and ExxonMobil may have participated. The main recruitment requirements for overseas companies included those currently pursuing development projects with a deep-sea daily production of over 100,000 barrels or those that have directly collaborated with KNOC within the past three years.
With more than two companies entering the bid for the East Sea deep-sea oil field submarine concession rights, the development of the East Sea deep-sea oil field, which was on the verge of drifting, is expected to breathe easier for now. KNOC stated, “We have no plans to pursue additional exploration of the Daewang Whale structure in the future,” adding, “If the investment attraction is successful, we will newly establish business plans including promising evaluation and exploration together with the joint concession holder based on the accumulated data.”
If the joint structure is realized, global companies with extensive deep-sea development experience are expected to reinterpret existing physical exploration data through their own analysis and determine new exploration candidates. Industry analysts expect that the participation of oil majors will greatly increase the chances of success, given that Korea has no experience in deep-sea gas field development.
According to this business structure, Korea can reduce its total cost burden to less than half while securing 51% of the shares for KNOC in case of successful development, allowing for majority profits. The government can collect up to 33% in concession fees and potentially secure additional “signing bonuses” depending on negotiations.
An official from KNOC said, “I hope that this project with great potential for our country will now be viewed as a matter of management and technology rather than politics,” adding, “We are about to negotiate investment conditions with companies interested in future business participation, and we hope that conditions will be created to negotiate in a way that maximizes national interests.”
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