Lee Cheol-woo, Governor of Gyeongbuk, "Will Establish a 100 Billion Won 'Energy Investment Fund' to Support the 'Daewang Whale' Project"

"Continued Promotion Despite National Assembly Budget Cuts"
Government Announcement: "3.5 Billion Barrels of Oil Reserves"

Lee Cheol-woo, Governor of Gyeongbuk Province, stated on the 29th, "Despite the central political turmoil, the local government will step up to support the Daewanggo-rae Project to ensure it does not face setbacks as it moves toward becoming an oil-producing country," adding, "Although the political situation is chaotic, the local government will continue to pedal to ensure that South Korea's challenge does not stop."

The Daewanggo-rae Project has been progressing with exploratory drilling conducted about 40 km off the coast of Pohang at the 'Daewanggo-rae' site since the 20th. However, concerns among local residents have grown as the opposition party cut most of the 49.7 billion KRW budget for the drilling project in the National Assembly.

Lee Cheol-woo, Governor of Gyeongbuk Province

Korea National Oil Corporation announced plans to proceed with the project using its own budget through corporate bond issuance for the time being. However, experts note that reflecting the nature of resource development projects, at least five drilling operations are necessary, each costing about 100 billion KRW, requiring approximately 500 billion KRW in funding over the coming years.

Gyeongbuk Province has proposed creating an 'Energy Investment Fund' to provide seed money for private investment and collaborate with the Oil Corporation to ensure the Daewanggo-rae Project proceeds without disruption in pursuit of the dream of becoming an oil-producing region.

Governor Lee Cheol-woo expressed his policy intention, stating that if the Oil Corporation, which leads the project, succeeds in the first drilling with meaningful results, "the National Assembly should establish and support the budget even through supplementary budgets. If additional drilling funds are not secured, Gyeongbuk Province will also consider setting up additional budgets." He further instructed the relevant departments to formulate detailed plans, saying, "Gyeongbuk Province will create an 'Energy Investment Fund' to support private investments related to the Daewanggo-rae Project and properly nurture it as a driving force for regional development."

Yang Geum-hee, Deputy Governor in charge of economic and industrial investment policies, emphasized, "The 'Energy Investment Fund' planned by Gyeongbuk Province will be formed with about 100 billion KRW annually, combining public finances and private funds, providing seed money for private energy projects." She added, "The support targets will include various energy projects such as the Daewanggo-rae Project, nuclear hydrogen in Uljin, the Daegu-Gyeongbuk hydrogen pipeline network (energy highway), SMR in Gyeongju, and renewable energy projects like solar, wind, and hydrogen fuel cell power generation. We will also open the way for residents to participate as shareholders so that they can enjoy the benefits of local investments."

The Gyeongbuk Energy Investment Fund is expected to invest in privately driven energy development projects through equity investments and loans, facilitating smooth project progress through support such as permits and approvals.

Gyeongbuk Province has prior experience launching the 'Gangdong Hydrogen Fuel Cell' power generation project in Gyeongju last November through a regional revitalization fund, boasting the world's largest power generation capacity sufficient for 270,000 households of four people for one year.

According to government announcements, the Daewanggo-rae Project holds at least 3.5 billion barrels, more than 70 times the volume of the Ulsan gas field, which succeeded in exploratory drilling in July 1998 and ceased production in 2021. If drilling succeeds, massive private investments worth tens of trillions of KRW are expected to be generated in natural gas processing and transportation facilities such as LNG terminals in the Yeongilman area, as well as hydrogen industry infrastructure, giving momentum to the realization of the 'Yeongilman Global Energy Hub' vision.

Aerial view of Yeongilman Global Energy Hub. Gyeongbuk Province

As significant ripple effects are expected not only nationally but also for the regional economy, local residents' aspirations for the Daewanggo-rae Project have been expressed through Gyeongbuk Provincial Assembly member Park Yong-seon's assertion in the Budget and Accounts Special Committee that Gyeongbuk Province should lead the project, and the Pohang City Council's adoption of a resolution to include the Daewanggo-rae Project budget. Some voices have even called for a 'second gold-collecting movement.'

Governor Lee Cheol-woo said, "I am well aware of the local residents' aspirations," emphasizing, "South Korea's energy policy, including the Daewanggo-rae Project, must be pursued without disruption regardless of political factions or regimes, considering energy security." He added, "Deep-sea oil field development projects have low success rates and high costs, so the central and local governments must take the lead and work with the private sector to proceed without setbacks. For this, energy policy should no longer be swayed by political factions or regimes; if necessary, the ruling and opposition parties should come together to reach an agreement."