Woodside, KNOC to Jointly Explore Oil in Korea

Deep-sea oil exploration off Korea’s east coast will resume for the first time in 16 years.

The Ministry of Knowledge Economy said on Sunday that Australia’s deep-sea oil exploration company, Woodside Petroleum Ltd., began oil exploration in an area known as Block 8 and northern part of Block 6-1 with Korea National Oil Corp.

This marks the first continental shelf exploration in Korea by a major foreign energy company since 1992 when Kirkland of Britain withdrew from the country.

With small amounts of oil and gas were found in a continental shelf in the East Sea in 2004, Woodside expected that there would be oil and gas in the deep-sea off Korea’s east coast, and found the two areas after reviewing the existing data for a year with the state-owned Korea National Oil Corp since March 2005.

The ministry also recently created Block 8 in Ulleung Basin in the East Sea and granted Woodside the rights to explore oil there in February last year.

The Australian company will conduct a survey at a depth of 1,000-2,000 meters by the end of July, analyze documents and decide whether to start the drilling process -- where to drill and how to conduct the drilling -- around next June.

Although the ministry has yet to figure out the possibility of finding oil and the amount of oil as the drilling process has not begun, it expects that the joint exploration project will serve as a good opportunity to acquire advanced seabed exploration technologies and nurture experts.

The ministry said, “Woodside will foot the total cost of $20 million and any extra cost beyond that will be divided by the two firms.”

changkim@donga.com