According to industry sources on Oct. 20h, Korea National Oil Corp. (KNOC) held an internal evaluation meeting last week to review the proposal to select BP as the preferred negotiator for the joint development of the East Sea deep-sea gas field. KNOC is currently in final consultations with the Ministry of Trade, Industry and Energy, the supervising department, before officially notifying BP of the selection result.

Previously, after completing the first drilling of the Daewang Whale promising structure, KNOC has been conducting a bidding process with the goal of proceeding with the project alongside an overseas business partner from the second drilling onwards. The bidding company can secure up to 49% of the shares. It is reported that BP not only proposed the highest share ratio among the participating companies but also received favorable reviews for submitting a development roadmap for after the second exploration.

From December last year to February this year, KNOC conducted the first drilling in the Daewang Whale promising structure, which was analyzed to have the highest possibility of oil and gas deposits. However, after a detailed analysis of the samples, they concluded that it lacked economic feasibility. Not only was the budget for the second drilling not allocated, but the project was also in a constrained situation as the government requested a public interest audit by the Board of Audit and Inspection on the Daewang Whale project, which was promoted under the Yoon Suk Yeol administration.

Despite these circumstances, the industry evaluates that the participation of a global company has reignited the momentum for the East Sea deep-sea gas project, which was on the verge of drifting. The government also maintains the stance that it will not prevent KNOC from pursuing the East Sea deep-sea gas field through foreign investment attraction. Kim Jeong-kwan, minister of trade and industry, said at a parliamentary audit on Oct. 13, “There were some regrettable aspects in the process of project promotion,” but added, “It is difficult to view the failure of the first drilling as the failure of the East Sea deep-sea gas field development.”