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Skepticism grows over East Sea oil exploration project

Skepticism is growing over the planned oil and gas exploration in the East Sea, with political tensions escalating as the main opposition Democratic Party of Korea steps up criticism, describing the project as "doomed to fail." In light of growing suspicions, it is crucial for the Yoon Suk Yeol administration to address these doubts before proceeding with the contentious project.

Negative views are primarily focused on Act-Geo, the U.S. geoscience firm that offered an optimistic assessment of potential reserves off Yeongil Bay in Pohang, North Gyeongsang Province. The firm estimated that there could be up to 14 billion barrels of crude oil and natural gas in the region. However, the U.S. company has faced controversies. Initially, it was revealed that the firm had neglected to pay its operating tax in February of last year, around the time it entered into a contract with the state-owned Korea National Oil Corp. (KNOC) for the exploration project. A local magazine reported that the U.S. firm had even lost its legal corporate status at the time of the agreement. KNOC subsequently clarified that the U.S. company settled the overdue tax in March of the same year, thereby regaining its status as a fully compliant entity.

Despite KNOC's explanation, however, skepticism persists. For one thing, Act-Geo's revenue stood at just over 30 million won ($21,780) in 2022 before significantly rising to 7 billion won last year, after signing a contract with KNOC. Established in 2016, the firm's unexpected participation has sparked criticism regarding why KNOC selected this small company over major global players like Woodside Energy, Australia's largest oil extractor. The Aussie firm withdrew from the East Sea project in January last year after 15 years of involvement.

KNOC attributed Woodside's withdrawal to internal issues. However, it became apparent that Woodside saw no promising prospects for the project. Given the inherent uncertainties in oil exploration, assessments can vary widely among companies. Act-Geo asserts that it has analyzed more data than Woodside. Nevertheless, skepticism remains regarding the small firm's divergent assessment compared to that of a global player.

A survey by Hangil Research showed that 60.5 percent of respondents do not trust the government's announcement about the exploration project, while only 33.2 percent expressed confidence. The poll surveying 1,000 people nationwide aged 18 and older, had a response rate of 5.0 percent with a 3.1 percent margin of error at a 95 percent confidence level. Despite the small sample size, the survey highlights the prevalent negative sentiment toward the project.

Despite the unfavorable public opinion, the Yoon Suk Yeol administration is poised to push forward with the project, starting the first exploratory drilling in December. Drilling five spots at depths exceeding 100 meters will cost at least 100 billion won per hole. There are concerns that the Yoon government could face grave setbacks and financial losses if the drilling fails, with the growing skepticism remaining unsolved.

To secure trust in the project, cross verification by other expert companies is crucial rather than hastily rushing into the project. Yoon should acknowledge the criticism that his abrupt announcement appears to be an attempt to influence political sentiment in his favor, following the decisive defeat of the ruling People Power Party in the April 10 general elections, coupled with his declining approval ratings.

Before embarking on the costly and contentious oil exploration project, the Yoon administration must tackle mounting skepticism. Cross verification by other experts should be conducted to enhance the project's credibility and secure public trust. That is the best way for Yoon to address the issue, preventing possible political setbacks and financial losses.


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