South Korea’s recent oil and gas discovery off its southeastern coast could eventually reduce the country’s reliance on fossil fuel imports, but the discovery’s commercial development is unlikely to happen before the next decade.
President Yoon Suk Yeol announced exploration plans for the offshore oil and gas find at a recent press briefing, saying the estimate could be worth more than four years of oil consumption and as much as 29 years of gas demand for the country.
“Once the actual reserves are confirmed, preparations for commercial drilling will begin, with an aim to start commercial development around 2035,” Minister of Trade, Industry and Energy Ahn Duck-geun said during the briefing.
The world’s third-largest LNG importer, South Korea relies on fossil fuels to meet nearly 85% of the country’s energy consumption, and along with the recent oil and gas discovery, is counting on nuclear power to reduce reliance on fossil fuel imports.
However, uncertainty hangs over the discovery. David Hewitt of Hewitt Energy Perspectives told NGI he questions the success of the recent discovery, pointing out that it had not been previously discovered even though South Korea has explored up to 50 offshore wells around its coasts. Only one has proved commercially viable.
Australia’s Woodside Energy Group Ltd. and Korea National Oil Corp. previously had rights to explore the area, and Woodside reportedly said last year the area was no longer considered prospective. Definitive results to evaluate the actual level of reserves is due by the first half of 2025.
The current government has outlined plans to reduce fossil fuel imports by cutting liquefied natural gas’ share in the country’s power mix to 11% by 2038, and to increase the use of nuclear power. South Korea has more than 26 nuclear reactors providing about one-third of South Korea's electricity, according to the World Nuclear Association.
Despite plans to increase nuclear power generation, Korea’s demand for LNG remains strong.
The Ministry of Trade, Industry and Energy (MOTIE) said in early May that power utility, Korea Gas Corp. (Kogas) is looking for short-term and long-term LNG deals to replace an anticipated LNG supply shortfall. The company’s long-term contracts with Qatar, Oman and other providers expire between 2026 and 2030.
In addition, Korea is tendering for spot cargoes. Kogas has closed several long-term deals so far this year, including deals with Woodside and BP plc.
Korea South-East Power Co. Ltd recently agreed to a long-term deal withTotalEnergies SE. Korea Midland Power Co. Ltd., meanwhile, extended its LNG supply deal with Vitol Inc. The original 4 million metric tons/year (mmty) deal ends in 2025 and has been extended to 2028.
Korea imported 46.08 mmty of the super-chilled fuel last year, compared to 47.36 mmty in 2022. During the January-May period of this year, LNG imports were marginally lower at 19.70 mmty, compared to 19.89 mmty during the same time last year, according to Kpler.
