Korea National Oil Corp. (KNOC) has decided to extend the bidding deadline for the second drilling project in the Donghae deep-sea gas field. This decision comes after some companies, having analyzed the “Daewang Whale” drilling data belatedly, requested more time for data analysis. According to industry sources, 4-5 global major oil and gas companies are considering participation in the project.

On June 19, industry sources reported that KNOC decided to extend the bidding announcement period for equity participation in the Donghae Offshore Block, which was originally set to close at 3 p.m. on June 20. A high-ranking government official explained, “Companies have requested more time to review and make decisions,” adding, “We will extend the bidding deadline.” With the extension of the bidding deadline, the selection of candidates, initially scheduled to be completed in early July, is also expected to be delayed. A government official stated, “We plan to proceed with the goal of finalizing the investment attraction by the end of this year at the latest.”

The industry’s request for a deadline extension is due to the considerable time required for data review and analysis. An official from the Ministry of Trade, Industry and Energy explained, “For private companies to decide on project participation, they need to go through a process of verifying and analyzing the data of samples obtained through the first drilling,” adding, “Since we require them to come directly to the designated data room for security reasons, companies that accessed the data later might not have enough time.”

The unclear stance of the new government on the Donghae deep-sea gas field project is also cited as a reason for bidders’ hesitation. Given the nature of resource development projects, they can be stalled for long periods without government cooperation. The Democratic Party of Korea, during its time in opposition, had defined the Daewang Whale project as a “scam” and launched offensives against it.

The total area of the Donghae offshore block up for bidding is 20,058 square kilometers, divided into four sectors. The selected company will enter into a contract with KNOC for up to 30 years to proceed with the second drilling of the Donghae deep-sea gas field. If development is successful, the maximum royalty rate payable to the government by the operator is 33%. Previously, the Ministry of Trade, Industry and Energy announced that it would seek foreign investment for the second drilling onwards after releasing the results of the first Daewang Whale drilling. A ministry official said, “We judged that participation of global majors would minimize financial requirements while enhancing the project’s credibility,” adding, “However, we will adjust the equity ratio to ensure we don’t lose resource sovereignty.”

Source: BusinessKorea