As the economic feasibility of the East Sea gas field development project, known as the Blue Whale project, has been revealed to be lacking, controversy surrounding the American consulting firm ACT-GEO, which conducted the service, is resurfacing. ACT-GEO previously claimed that there were up to 14 billion BARRELs of oil and gas buried off the coast of Pohang in Yeongil Bay, but it failed to detect hydrocarbons in the highly anticipated Blue Whale project.
According to the Korea National Oil Corporation (KNOC) on the 7th, ACT-GEO, established in 2017, is a geological exploration consulting company operated by advisor Vitor Abreu. Abreu is known to have led deep-sea mining projects while serving as the geological group leader at ExxonMobil and has also served as the president of the American Association of Sedimentologists. The oil corporation stated that Abreu participated in oil exploration projects while working at ExxonMobil.
The oil corporation signed a contract with ACT-GEO for a comprehensive technological assessment of the East Sea Ulleung Basin worth $1.29 million in February 2023. Since its establishment, ACT-GEO has conducted evaluations of numerous major projects in locations including Guyana, Bolivia, Brazil, Myanmar, and Kazakhstan, as its employees are considered to have expertise in deep-sea exploration from major oil development companies like ExxonMobil, Shell, and BP.
Although the Ministry of Industry and the oil corporation assert ACT-GEO's expertise, controversy surrounding the company continues. Firstly, questions have been raised regarding whether ACT-GEO is indeed a professional geological exploration firm. It is reported that ACT-GEO previously registered its business with the Texas state government and tax authority as 'vocational training and related services,' and listed 'geological consulting' as a secondary business.
In June of last year, ACT-GEO became embroiled in controversy over claims that it was a one-person company operated solely by advisor Abreu. This stems from the fact that the employee count listed in company information registered with the U.S. Census Bureau is one, and the average annual revenue reported to the federal government was $27,701. There were also indications that ACT-GEO's office was located in a house in Houston, Texas.
At that time, Abreu held a press conference during his visit to Korea and stated, "The location listed as ACT-GEO's address is indeed my home," while also claiming, "ACT-GEO has 14 employees." He added, "The only essential elements for our work are computers, software, and cameras," stating, "Our team is also scattered across New Zealand, Brazil, Mexico, and Switzerland, with only a few in Houston."
Additionally, the fact that ACT-GEO was behind on taxes when the oil corporation contracted with it has also been noted as an issue. It is known that ACT-GEO failed to pay corporate sales tax from January 2019 to March 2023, resulting in some restrictions on its corporate actions. At the time, ACT-GEO's unpaid taxes amounted to $1,650, but it was reported that the company settled its tax debts after signing the contract with the oil corporation. In response to the controversy, the oil corporation rebutted that the tax delinquency was a minor issue due to an error, stating, "We continued normal operations during the period of delinquency."
Some have called for the oil corporation to disclose the entire process of awarding national project contracts to ACT-GEO. Three companies, including Schlumberger, Halliburton, and ACT-GEO, participated in the bidding, leading to criticism questioning how ACT-GEO won the bid over industry 'Big Three' Schlumberger.
In response, the oil corporation clarified that the selection was based on deep-sea expertise and pricing factors, asserting that there were no issues with the selection process. The oil corporation stated, "Advisor Abreu is an authority on so-called 'sequential stratigraphy' and deep-sea sediment analysis," adding, "He has extensive experience in deep-sea exploration from his time at ExxonMobil."
Despite the ongoing controversy, the oil corporation has entrusted additional services to ACT-GEO. Last year, ACT-GEO was assigned an additional prospective evaluation service worth $1.7 million, and it was reported that the conclusion of the service was drawn in December of the same year. In the political arena, criticism arose suggesting, "Wasn't the decision to assign an additional prospective evaluation service following the comprehensive technological assessment of the East Sea Ulleung Basin a favor to ACT-GEO?" and questioning whether ACT-GEO had "scammed $4 billion."
Meanwhile, it has been reported that ACT-GEO analyzed that there could be up to 5.17 billion BARRELs of gas and oil buried in the East Sea Ulleung Basin 'Devil Shark' during its additional prospective evaluation service. The Devil Shark area was excluded from the seven prospective structures for deep-sea gas fields announced by the government in the first round last year. The Ministry of Industry plans to conduct a verification of the related service report, which is known to take over six months.