[E-Daily Reporter Kim In-kyoung ] An audit by the Board of Audit and Inspection has revealed that the “Daewang-gorae Project”—a deep-sea gas field development project in the East Sea promoted by the Yoon Suk-yeol administration—proceeded to drilling without sufficient verification. The audit also uncovered evidence that the Office of the President at the time had demanded that the schedule for additional drilling, originally set to run through 2029, be accelerated to be completed within the president’s term (by May 2027).

On the 16th, the Board of Audit and Inspection released the results of its “Public Interest Audit Request Regarding the East Sea Deep-Sea Gas Field Project,” which contained these findings. This audit was conducted in response to a public interest audit request filed last October by Kim Jeong-gwan, Minister of Trade, Industry and Energy, regarding the selection process for the feasibility assessment contractor, the basis for proceeding with the drilling project, and the decision-making and announcement processes.

The audit found that in October 2023, the Korea National Oil Corporation (KNOC) conducted a prospect evaluation and reported to the Ministry of Trade, Industry and Energy that it had identified seven prospective structures in the deep waters of the East Sea, with an estimated 14 billion barrels of exploratory resources and an exploration success rate of around 20 percent. Subsequently, in November of the same year, the Ministry of Trade, Industry and Energy reported to the Office of the President that while there was a possibility of 3.5 billion to 14 billion barrels of oil and gas existing, the actual presence of reserves was unknown, and therefore further analysis and verification were necessary. During a face-to-face briefing at the Office of the President in May 2024, the Ministry also recommended refraining from public announcements, stating that the probability of exploration success was within 20% and thus highly uncertain.

However, on the 31st of that same month, during an internal briefing at the Office of the President, it was decided that then-Minister of Trade, Industry and Energy Ahn Deok-geun would report directly to the President and that a public announcement would be made. Notably, on June 2, during Minister Ahn’s direct briefing to former President Yoon, the then-Chief of Staff recommended a public announcement, citing the potential for a significant impact on the stock market. The following day, on the 3rd, President Yoon held a state affairs briefing and announced, “There is a high probability that up to 14 billion barrels of oil and gas are buried off the coast of Yeongil Bay in Pohang.”

The Board of Audit and Inspection determined that the figure of up to 14 billion barrels announced at the time—a simple sum of the estimated reserves across seven prospective structures—was “highly unlikely to be realized.” On the day of the announcement, Korea Gas Corporation’s stock price hit its daily upper limit for the first time since its initial public offering. Subsequently, when drilling results announced in February of last year revealed the project was not economically viable, the company’s stock price plummeted by more than 10 percent.

The drilling schedule was also significantly accelerated compared to the original plan. The plan reported by the Ministry of Trade, Industry and Energy to the Office of the President in May 2024 called for drilling the first well at Daewang-gorae by the end of that year, followed by four additional wells by 2029. However, in September of the same year, the Office of the President demanded that the schedule for additional drilling be brought forward to within May 2027—the end of President Yoon’s term.

When Minister Ahn Deok-geun reported a plan that shortened the completion date to the first quarter of 2028 and explained that it required political judgment, President Yoon rebuked him, saying, “I am the one who makes political judgments,” and ordered him to draw up a new schedule. Ultimately, Minister Ahn—even though he believed the schedule was unrealistic—resubmitted a plan to drill four additional wells by 2026. However, the Board of Audit and Inspection took no separate action against the Office of the President or the Ministry of Trade, Industry and Energy, considering factors such as the lack of specific regulations governing the President’s public announcements.

It was also confirmed that the Korea National Oil Corporation (KNOC) had not conducted sufficient verification prior to drilling. The median estimated exploration resource volume for the seven prospective structures identified by the consulting firm was 7.42 billion barrels—equivalent to 165 times the production volume of the East Sea gas field over 17 years. Although the resource volume for some prospective structures was calculated to be 39.2 times greater than in previous evaluations, KNOC established a drilling plan even before the consulting project was completed, without sufficient verification of the estimated resource volume or the probability of success.

In fact, drilling results at Daewang-gore showed a gas saturation of just 6.3 percent—significantly lower than the initially expected 50–70 percent—and the gas confirmed was found to be biogas from biological decomposition, rather than thermogenic gas, which is highly likely to contain oil and natural gas.

Violations of the National Procurement Act were also confirmed in the selection process for the feasibility study contractor. Although there were as many as 17 companies with relevant experience, KNOC conducted a restricted competitive bidding process by selecting only a few firms without conducting a separate market survey, and did not disclose the evaluation criteria to the participating bidders. The Board of Audit and Inspection (BAI) demanded disciplinary action against those involved and called for improvements, requiring that future drilling be conducted only after undergoing sufficient verification, such as technical evaluations by external expert agencies.

The Board of Audit and Inspection stated, “We conducted the audit with a focus on verifying the objective circumstances and facts, as well as the appropriateness of the project execution process—including the selection of service providers—rather than on the ‘appropriateness’ of policy decisions,” adding, “We demanded improvements regarding the violation of the National Procurement Act through the improper conduct of a restricted competitive bidding process and technical evaluations, as well as the hasty push for drilling without sufficient verification of the service results.”