[Energy Odyssey] ⑤ Daewang-gorae Is Not to Blame... Resource Development Outlasts a Five-Year Administration

Ⅰ. South Korea Trapped in an Energy Bottleneck
Resource Policy Swings Between Development and Restructuring with Each New Administration
World’s 10th Largest Oil and Gas Consumer, but 4th in Net Imports
Blue Whale’s Hasty Execution Must Be

Editor's NoteAmid recent supply chain crises triggered by the Middle East wars and the government's mega projects, the importance of energy is greater than ever. South Korea, which relies on overseas sources for most of its primary energy, faces the difficult challenge of achieving energy security, carbon neutrality, and economic growth simultaneously. In this series, reporters covering the energy industry on the ground will examine various current issues and seek alternatives.

A country without a single drop of oil. This phrase has long accompanied explanations of South Korea's energy reality. More precisely, however, rather than being a country confirmed to be resource-poor, South Korea is closer to a country that simply has not explored enough yet. Over several decades, only 49 exploratory wells have been drilled on the Korean continental shelf. Among these, 12 wells in the East Sea led to the discovery of natural gas, and the Donghae gas field produced gas for 17 years, recouping a total of 2.6 trillion won.

Failure is a premise in resource development. Only after analyzing geological structures, drilling exploratory wells, and accumulating failures and data does there become a possibility of discovering an oil or gas field. The main problem is that the timescale for resource development, which can span decades, rarely coincides with political cycles of five years. There was a period when the government purchased overseas blocks and companies to increase self-sufficiency in resource development. When a new administration came in and issues regarding insolvent projects surfaced, new development stopped and assets were sold. However, when energy supply chains were once again shaken, the emphasis returned to resource security, leading to the emergence of the "Great Whale" (Daewang Gorae) in the East Sea.

The first exploratory drilling for the Great Whale did not discover an economically viable gas field. A recent audit by the Board of Audit and Inspection also pointed to issues such as insufficient verification during the project implementation process, contract and decision-making procedures, and shortened drilling schedules tailored to the political calendar. Still, a single failed exploration cannot, by itself, determine the overall potential of the Korean continental shelf. The crucial question is whether South Korea, which imports virtually all its oil and gas, will continue to pursue domestic resource exploration and, if so, how such efforts will be sustained in the face of changes in administration or success and failure of specific projects.

According to Korea National Oil Corporation (KNOC) on September 20, 2026, South Korea's daily oil and gas consumption last year averaged 3,899,000 BOE (barrels of oil equivalent), ranking 10th in the world. While lower than the United States (35,848,000 BOE), China (24,819,000 BOE), and Russia (11,665,000 BOE), it is not far behind Japan (4,837,000 BOE). Conversely, domestic production is virtually nonexistent. Net imports, calculated as consumption minus production, are also 3,899,000 BOE per day, which is the same as the consumption level—placing South Korea fourth globally after China (16,074,000 BOE), India (5,708,000 BOE), and Japan (4,837,000 BOE).

Import sources are also heavily concentrated. Last year, about 70% of South Korea's oil imported was from the Middle East. Instability in the Middle East or disruption of major maritime routes such as the Strait of Hormuz could directly impact domestic supply. If resource nationalism intensifies among oil-producing countries, securing overseas resources could become even more difficult. Long-distance shipping costs and Asia-specific pricing policies by oil-producing nations also impact domestic import costs.

These issues cannot be immediately resolved solely by expanding renewable energy and nuclear power. Even if the proportion of fossil fuels in power generation is reduced, oil remains a necessary raw material for the petrochemical industry, not just transportation fuel. Regardless of the speed of the energy transition, South Korea still faces the problem of securing crude oil and natural gas stably throughout the process.

Status of domestic continental shelf blocks managed by Korea National Oil Corporation. Blocks include West Sea Blocks 1 to 4, South Sea Blocks 1 to 6, and East Sea Blocks 6-1 and 8. Data provided by Korea National Oil Corporation.

Half a Century of Domestic Resource Exploration... Only 49 Wells Drilled on the Continental Shelf

It is not the case that South Korea has not pursued resource exploration. Since its establishment in 1979, Korea National Oil Corporation has carried out exploration in the East Sea, West Sea, and South Sea. As of the end of June 2026, the total area of blocks explored on the domestic continental shelf is 390,075 square kilometers. Linear geophysical surveys alone total 125,040 line-kilometers, with areal-based surveys covering 14,008 square kilometers. However, only 49 exploration wells have actually been drilled to confirm geological structures.

By region, most exploration has taken place in the East Sea. In the 6-1 South Block alone, 22 wells were drilled, with 2 in the 8·6-1 West Block, 3 in the 6-1 East Block, and 1 in the 8 Northeast Block. In the West Sea, 6 wells were drilled, and 8 in the South Sea. In the Joint Development Zone (JDZ) designated in 1978, 7 wells have been drilled.

The project that turned South Korea into a producer was the Donghae gas field. KNOC discovered a quality natural gas reservoir in 1998 after drilling 12 exploratory wells in the shallow waters of the East Sea. Following subsequent development and construction of production facilities, commercial production began in 2004. After repeated cycles of investment and failure, South Korea secured its first self-operated oil and gas field. Total earnings recovered until the end of production were about 2.6 trillion won.

By the nature of oil development, the appearance of promising structures in seismic surveys does not immediately translate into oil or gas fields. Only through surface geological, gravity, magnetic, and seismic surveys to identify high-potential structures, followed by drilling, can the actual presence of oil or gas be confirmed. Even when hydrocarbons are discovered, a production test is needed to assess reservoir productivity. Thereafter, reserves and production rates are re-evaluated, and economic feasibility is reviewed for development plans. Only then are facilities such as production wells, platforms, and pipelines constructed to begin commercial production.

This is why a single failed exploration well cannot be taken as evidence that there is no oil and gas in the surrounding waters. Even failed explorations provide data on strata, pressure, and reservoir characteristics, which serve as vital references for future projects.

Indeed, after the Donghae gas field was discovered, KNOC continued geophysical exploration in the East Sea deep waters starting in 2007. In 2022, the company launched the "Gwanggaeto Project," a mid- to long-term plan for domestic continental shelf development to bolster energy security and maritime sovereignty, and identified seven promising structures in the deep East Sea the following year. The Great Whale exploratory drilling carried out from December 2024 to February last year was part of this process.

Japan Drilled 813 Wells While South Korea Drilled 71

Expanding the perspective to neighboring countries offers a clearer picture of South Korea's exploration scale. As of June 2024, KNOC reports that the total number of oil and gas exploration drilling projects in South Korea stands at 71. In contrast, Japan has drilled 813 wells under the same criteria—over 11 times more than South Korea. China drilled a staggering 48,779 wells. In proportional terms, South Korea’s performance is about 8% of Japan's, and merely 0.1% of China's.

Narrowing this comparison to recent years, the disparity is even clearer. In the past decade, South Korea drilled only four exploration wells in the East Sea, including the Great Whale, and not a single well in the West or South Sea. Meanwhile, in the same period, the country conducted three-dimensional seismic surveys over an area of about 50,000 square kilometers in the East Sea, accumulating geological data but rarely following up with drilling to confirm underground structures.

China began drilling in the East China Sea in the 1980s and has drilled 158 wells there to date, securing an estimated 1.7 billion barrels of oil and gas reserves. In the South China Sea, China has pursued exploration for 40 years, continuing projects even after foreign oil companies failed in their attempts. In 2023 alone, 12 wells were drilled, leading to the first deepwater oil field discovery in March 2024.

Israel is also a meaningful comparison. Both South Korea and Israel have few natural resources and succeeded in discovering their first shallow water gas fields in the late 1990s. After that, their paths diverged.

Following its initial shallow water gas discovery, South Korea only drilled three additional deepwater wells. Israel, on the other hand, drilled 28 deepwater wells and more than 350 wells in total since establishing its Petroleum Law in 1952. While only small onshore oil and gas fields were found, Israel did not stop exploring. It discovered its first commercial offshore gas field in 1999, and in 2009, found a major deepwater gas field. Since then, three gas fields have begun production, transforming Israel from a gas importer to a gas exporter.

Policy Swings: 'Aggressive Development → Restructuring → Renewed Development'

The inconsistency in resource development policies in South Korea is a bigger issue than the number of wells drilled. When global oil prices surged and resource nationalism spread in the 2000s, the government elevated the securing of overseas resources as a national agenda. During the Lee Myung-bak administration, policy resources were concentrated on increasing the self-sufficiency rate. KNOC, Korea Gas Corporation, and at the time, Korea Resources Corporation, actively acquired overseas blocks and companies.

This resulted in both achievements and failures. Criticism was raised that some assets were acquired at excessively high prices without appropriate due diligence, and the subsequent drop in oil prices increased financial burdens on state-run companies. Policy then swiftly shifted from seeking new investments to restructuring and selling off bad assets. The focus moved from expanding resource development to curbing new projects and liquidating existing assets.

As a result, not only insolvencies were cleaned up, but new exploration and investments dwindled. Domestically, this is reflected in exploration results—only four wells drilled in the East Sea and none in the West or South Sea over the past decade.

However, following the Russia-Ukraine war, instability in the Middle East, and supply chain realignment amid U.S.-China tensions, the mood has changed again. The presumption that resources could simply be procured as needed in the global market has been shaken, highlighting the strategic value of tangible assets such as overseas production blocks, long-term import contracts, and storage facilities.

The LNG Canada project demonstrates just how differently timeframes for resource development and policy evaluation can move. In 2009, Korea Gas Corporation first joined the project. Amid controversy over unprofitable overseas resource development, withdrawal and equity sale were considered, and its stake dropped from 20% to 5%. After more than 15 years of development, however, production eventually commenced, and the value of securing an LNG supply source outside the Middle East and the United States was emphasized. Especially significant was the ability to import LNG directly from Western Canada to South Korea, bypassing the Strait of Hormuz and the Panama Canal, thus diversifying the supply chain.

Similar cases are found among overseas assets currently held by KNOC. As of the end of last year, the company produced around 127,000 barrels of oil equivalent per day and held about 900 million barrels in reserves overseas. As of March this year, 18 overseas projects were underway in 14 countries.

In Vietnam's Block 15-1, KNOC was involved from the exploration stage, with its own technical team succeeding in discovering oil and commencing production in 2003. In the UAE's Aldafra block, the company signed the main agreement in 2012 and declared in 2015 that it had secured commercially developable oil reserves. Of approximately 180 million barrels in 2P reserves, KNOC's share was about 54 million barrels as of the end of last year. In the United States, participation in Eagle Ford since 2011 secured a North American shale gas production hub.

Status of Overseas Oil and Gas Development Projects of Korea National Oil Corporation. KNOC is conducting resource development projects worldwide, including Harvest in Canada, Eagle Ford in the United States, Block 15-1 in Vietnam, Aldafra and ADNOC Onshore in the UAE, and Dana in the United Kingdom. Data provided by Korea National Oil Corporation.

The Lessons from the Great Whale Controversy: The Process Matters More than 'Failure'

Within these shifting trends, the Great Whale project raised not only the question of whether domestic resource development is necessary, but also how it should be conducted.

According to the Board of Audit and Inspection's findings released on September 16, 2026, KNOC proceeded with the Great Whale drilling without sufficient verification of the prospect's potential. The geological chance of success presented by the evaluation company for the Great Whale structure was 19.1%, even lower than the "Bangeo" structure that failed to discover gas in 2021. The Board of Audit and Inspection judged that only the adequacy of the analysis method was reviewed, so key steps such as validation were skipped at the planning stage. The audit identified seven counts of illegal or improper conduct, including issues with competitive bidding by nomination and technical evaluation processes.

There was also evidence of political timelines influencing resource development. The Ministry of Trade, Industry and Energy (previously Ministry of Trade, Industry and Energy) initially reported to the presidential office that three wells would be drilled independently by KNOC in 2024-2026, with two more in 2028-2029. However, the presidential office demanded an accelerated schedule to fit within former president Yoon Suk Yeol's term, resulting in a revised plan to drill four additional wells by 2026, excluding one. The Board of Audit and Inspection explained that, due to the absence of relevant regulations, it could not determine if the reporting to the executive office and the president’s announcement violated any laws or regulations.

It is important to distinguish between two separate issues in the case of the Great Whale: the fact that the exploration failed, and whether the project was executed appropriately. Exploration inherently involves the risk of failure, but that does not justify laxity in business viability verification, investment review, or contract procedures. Conversely, ending all exploration in an area based solely on the lack of commerciality in a single well is also inconsistent with the nature of resource development.

The Great Whale drilling did not leave South Korea empty-handed. According to KNOC, geophysical surveys in the deep East Sea since 2007 and the deepwater exploratory drilling, including the Great Whale, helped accumulate marine geological data and confirmed the presence of quality sandstone and gas deposits. While this does not equate to discovering commercially viable oil or gas fields, KNOC notes that such geological data can be useful for determining future exploration targets.

Allow 'Failure,' but Not 'Negligence': Building a Robust System

The key challenge left by the Great Whale is not simply whether to continue or discontinue exploration. The bigger task is how to shape policies that reflect the long-term nature of resource development, independently of individual project outcomes.

Resource development takes a long time from exploration to commercial production. After acquiring a block, physical surveys and exploratory wells are needed, followed by reserves evaluation, and economic feasibility reviews before moving on to development and production. A KNOC source said, "The geological data and drilling experience gained from exploration serve as foundational data for subsequent exploration. It is difficult to judge the overall resource potential of an area based on the result of a single drilling."

However, the uncertainty in exploration does not justify negligent business practices. The Board of Audit and Inspection’s review identified that the Great Whale project was pursued without sufficient verification and that the drilling schedule was advanced for political reasons. There is a need to distinguish between exploration failure and poor decision-making. "Resource development is a high-risk endeavor subject to the possibility of failure, so the technical and economic viability of each project must be thoroughly reviewed," a KNOC official said, "Moreover, the accumulation of geological data, exploration technology, and specialized talent is crucial, as such assets cannot be built up in the short term."

Above all, ensuring the continuity of resource development policy, regardless of the success or failure of individual projects, is also essential. Rather than focusing on the success of each individual block, the government’s role is to establish an institutional foundation so that resource development can proceed under consistent principles. Exploration and development should be left to expert organizations, while the government supports investment criteria, verification procedures, and mid- to long-term exploration plans. This approach seeks to reduce the risk of the overall national resource development strategy being destabilized by changes of government, fluctuations in international oil prices, or the outcomes of individual wells.

The term of administration is five years, but the time needed to discover and develop resources is much longer. The success or failure of South Korean resource development depends on how well policy can withstand this difference in timescales.

This content was produced with the assistance of AI translation services.