President Yoon Suk Yeol last week announced he gave the green light to conduct exploratory drilling for potentially vast oil and gas prospects found off the eastern coast of the nation, based on Act-Geo's research. It projected 4 billion barrels-equivalent of gas and oil might be buried in the waters off Yeongil Bay near Pohang.
The announcement was followed by various allegations over Act-Geo's reliability, including a report that the company had an outstanding franchise tax of about $1,650 when the state-run Korea National Oil Corporation (KNOC) commissioned the firm to analyze the prospects in the East Sea in February 2023.
Second Vice Industry Minister Choi Nam-ho said on Monday that neither KNOC nor the government was aware of that fact.
"I apologize, but we did not know about it at the time of the contract," Choi said during a press briefing in a government complex in the central city of Sejong.
KNOC and the Ministry of Trade, Industry and Energy clarified that there was no issue with the service contract since Act-Geo maintained its corporate status.
"Since the corporate entity is still active, the contract itself is not problematic. However, I apologize on behalf of the government and KNOC for not comprehensively reviewing parts like its tax payment certificate," Choi said.
He also corrected his earlier statement regarding the number of companies involved in the bidding process with Act-Geo, clarifying that it was actually three, not four.
Despite concerns over the credibility of Act-Geo's expertise, Choi said the ministry would not consider cross-validation procedures. Act-Geo is expected to play a crucial role in determining the locations for drilling exploration.
"Since Act-Geo is the organization that conducted the comprehensive data interpretation and analysis, they are presumed to have the best understanding of the location selection," Choi said. "However, the final decision on the first drilling location will be made by KNOC, based on Act-Geo's consultation."
Based on the geophysical study conducted by Act-Geo, the government expects that up to $1.4 trillion worth of resources could be buried. Drilling work to determine the presence of gas and oil will begin in December. The government plans to drill at least five holes, each costing more than 100 billion won ($72.6 million).
reporter
Kim Joo-heon
jhkim123@ajunews.com
