Korea National Oil Corporation (KNOC) was reported to have selected Britain's BP as the preferred bidder for joint development of a deepwater gas field in the East Sea, but the government is reportedly reviewing ways to put the brakes on the move.
An official at the Ministry of Trade, Industry and Energy said on the 26th, "We will comprehensively review the results of consultations with the bidders and decide the future direction of the project," adding, "We will look into whether sufficient investment can be secured, including the size and plan of the investment." This raises the possibility that the government could reconsider KNOC's business plan from square one.
This current undercurrent emerged after Minister Kim Jung-kwan of the Ministry of Trade and Industry (MOTI) said, "KNOC's preferred negotiation partner has not yet been selected."
At a National Assembly audit on the 24th, the Minister answered "No" to a question asking whether "a specific foreign company has already been decided as the preferred negotiation partner," and noted, "Reports about the selection of a preferred bidder for the East Sea deepwater gas field appear to be KNOC's media play." The Minister went on to say, "We view the matter gravely," adding, "I have ordered an investigation into how the report came about. Something unacceptable has happened."
KNOC has been carrying out an international bidding process to attract an overseas partner starting from the second exploratory drilling phase of the East Sea deepwater gas field. BP, ExxonMobil, and other major global oil developers were said to have taken part in the process. KNOC reportedly held an internal evaluation meeting in mid-month and internally selected BP as the preferred negotiation partner for joint development. KNOC expected BP's expression of interest to provide new momentum for the project, but the government does not appear to view this decision as final or valid.
In the meantime, the Lee Jae-myung administration had signaled a Board of Audit and Inspection review over issues such as the "ACT-GEO selection controversy," but it had not taken a position to block KNOC from continuing the project by attracting foreign capital.
However, some analyze that the government's stance may have changed in light of the Minister's latest remarks. In the industry, there are concerns that if the decision on the project is put on hold for a long time, foreign corporations are more likely to reconsider participation, which could adversely affect state-owned companies' overseas projects.