ExxonMobil, the largest major oil and gas company in the Western world, has shown interest in the Korea National Oil Corporation’s (KNOC) roadshow and participated in verifying the economic feasibility analysis of the “Blue Whale Project.” This project, located in the East Sea, boasts estimated reserves of up to 14 billion barrels, valued at around 2,000 trillion won (around $1.48 trillion). Despite its participation, ExxonMobil has not yet made an investment decision.

The Blue Whale Project has also attracted the attention of Malaysia’s state-owned oil and gas company, Petronas.

According to the petrochemical industry on July 26, KNOC is conducting a roadshow (investment briefing) for Aramco and Eni regarding the project. It has been confirmed that these global major oil and gas companies are considering investing in the development of the deep-sea oil and gas fields in the East Sea.

Aramco, a giant state-owned company from Saudi Arabia, and Eni, an Italian state-owned company, are both considering investing in the Blue Whale Project. The Ministry of Trade, Industry, and Energy expects that attracting investment from foreign companies will help save development costs and supplement the technological capabilities that domestic companies lack. The controversy over the project’s reliability, which had been raised mainly by the opposition, is also expected to subside. Currently, the ministry is reviewing the royalty system to prevent foreign companies from taking excessive profits.

KNOC plans to visit the headquarters of both Aramco and Eni soon for in-depth discussions. However, a KNOC official stated, “There is no information to disclose as the details related to the roadshow are confidential.”

According to Article 18 of the current Submarine Mineral Resources Act, submarine mining rights holders must pay royalties to the Minister of Trade, Industry, and Energy when extracting submarine minerals from submarine mining areas. However, the royalties are capped at a maximum of 12% of the sales price of the produced oil and gas, after deducting processing, storage, and transportation costs.

The Blue Whale Project represents a significant opportunity for South Korea to bolster its energy security and reduce reliance on foreign oil imports. By attracting investment from major global players like Aramco, Eni, and potentially ExxonMobil and Petronas, KNOC aims to leverage their technological expertise and financial resources to develop the deep-sea oil and gas fields efficiently.

The Ministry of Trade, Industry, and Energy’s review of the royalty system is a crucial step in ensuring that the benefits of the project are equitably shared and that foreign investors do not reap disproportionate profits. This move is expected to address concerns about the project’s economic viability and fairness, thereby garnering broader support for the initiative.

Source : Businesskorea