[2024 National Audit] Dispute over 'Daewang Whale' at Industry Committee Hearing... "Needs Preliminary Feasibility Study" VS "First Drilling Not Subject"

Government: "New Settings After Completion of 1Chugong Drilling"
Regarding Czech Nuclear Power Plant Contract Profitability and Dumping Offensive
Andeokgeun: "Completely Wrong Story"

During the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee's audit of the Ministry of Trade, Industry and Energy on the 7th, the ruling and opposition parties clashed over the so-called 'Daewanggorae' project, a deep-sea gas field drilling operation in the East Sea, which did not undergo a preliminary feasibility study.

The Ministry of Trade, Industry and Energy stated that a preliminary feasibility study was unnecessary because the cost of the first-phase drilling project did not exceed 200 billion KRW, while the Democratic Party argued that a preliminary feasibility study was essential since the project's five-year budget amounts to 576.1 billion KRW.

Kim Seong-hwan, a member of the Industry Committee from the Democratic Party, pointed out the need for a preliminary feasibility study during the 2024 Ministry of Trade, Industry and Energy audit at the National Assembly, citing the ministry's submitted data on the Daewanggorae project, which showed a five-year budget of 576.1 billion KRW.

In response, Minister An Deok-geun of the Ministry of Trade, Industry and Energy explained, "The area planned for drilling in December this year is an obligatory drilling site under the petroleum concession held by the Korea National Oil Corporation, so it has already been planned," adding, "Other than this year's mandatory drilling, new petroleum concessions will be established, making the development project itself a new project."

The plan is to conduct a pilot drilling operation scheduled for December this year and then designate the remaining promising blocks as new projects next year to advance the project. Minister An said, "After the first-phase drilling is completed, new petroleum concessions will be established, and the preliminary feasibility study will be discussed with the Ministry of Economy and Finance."

On the other hand, Democratic Party lawmaker Kwon Hyang-yeop criticized the government, citing answers from a Korea National Oil Corporation official in March, stating, "The detailed drilling plan for Daewanggorae was already established on March 18," implying that the government had already formulated detailed plans but pretended to be initiating a new project.

Minister An responded, "The Korea National Oil Corporation has an obligation to conduct mandatory drilling if it holds petroleum concessions for ten years. Because of this obligation, plans are continuously being made," adding, "The process of selecting drilling locations involves extensive verification and revision work."

Minister Andeok Geun of the Ministry of Trade, Industry and Energy is taking the witness oath at the National Assembly's Trade, Industry, Energy, Small and Medium Venture Business Committee's audit of the Ministry of Trade, Industry and Energy held on the 7th. Photo by Hyunmin Kim kimhyun81@

Opposition Points Out Overestimation of Estimated Reserves and Controversy Over Commissioned Research... Government Says 'No Problem'

Democratic Party lawmaker Kim Gyo-heung criticized the government for initially announcing the estimated reserves of the Daewanggorae project as 14 billion barrels, stating, "Unlike the initial claim that the estimated reserves were five times Samsung's market capitalization, Minister An reduced it to twice Samsung's market capitalization during a KBS Sunday interview in July." He continued, "The explanation that the estimate was corrected to a median value to avoid providing misleading information to the public essentially admits that the president exaggerated the figures," questioning the minister.

Minister An replied, "We announced both the minimum and maximum values, and when mentioning the maximum, we used 14 billion barrels to help the general public understand the scale," adding, "Later, there was much discussion that it would be better to talk about the more probable median value, so we explained the median."

Kim Gyo-heung also pointed out, "Schlumberger, the world's largest oilfield services company with a market capitalization of 80 trillion KRW, was apparently not selected as an advisory company for the East Sea exploration because its research results were unfavorable." Lawmaker Song Jae-bong criticized the process of entrusting the evaluation of the East Sea deep-sea gas field project’s prospects to the American company Act-Geo, saying, "Wasn't Act-Geo commissioned to receive 'customized analysis results' by excluding global exploration companies?" He further claimed, "Act-Geo and the domestic and international advisory groups are interconnected through networks such as the University of Texas, making the verification process unreliable."

Minister An countered, "Schlumberger suggested conducting a technical evaluation because it discovered reserves much larger than the exploration probability and estimated reserves mentioned by Woodside within the East Sea resource development exploration area," explaining, "Woodside and the Korea National Oil Corporation jointly explored, and Schlumberger was commissioned for third-party verification. Schlumberger proposed the technical evaluation, which led to commissioning Act-Geo's deep-sea experts."

Opposition Raises Suspicions of Dumping and Loss-Making Bids for Czech Nuclear Power Plant... Government Says 'No Promise of Financial Support for Nuclear Construction'

Minister Andeok Geun of the Ministry of Trade, Industry and Energy is receiving a report from a staff member during the audit of the Ministry of Trade, Industry and Energy at the Industry, Trade, and Small and Medium Venture Business Committee held at the National Assembly on the 7th. Photo by Kim Hyun-min kimhyun81@

The opposition questioned the government over suspicions of dumping and loss-making bids for the Czech nuclear power plant and raised claims that the Korean government promised financial support for new nuclear power plant construction. Democratic Party lawmaker Kim Jeong-ho inquired whether the Letters of Intent (LOI) submitted by the Korea Export-Import Bank and the Korea Trade Insurance Corporation during the Czech nuclear power plant bidding included financial support, which Minister An denied.

Minister An explained, "LOIs are routinely sent in such projects as a general expression of willingness to cooperate, not as a commitment to support the project," adding, "The previous administration sent seven LOIs related to nuclear projects, and our administration has sent eight." He also read from the original English LOI, emphasizing, "This letter clearly states that it does not constitute a commitment to provide funding for the Czech new nuclear power plant project," rebutting the claim.

Lawmaker Kim Gyo-heung also cited the European Union's analysis of the internal rate of return (IRR) for the Czech nuclear power plant, arguing that "Korea gains little profit from participating in the Czech nuclear power plant project." Minister An responded, "That is completely incorrect. That analysis pertains to the electricity business operated by the Czech nuclear power plant operator, whereas we are engaged in the engineering, procurement, and construction (EPC) business for building the Czech nuclear power plant," clarifying the distinction.