A South Korean company’s overseas gas field project, which had been suspended for nearly a year due to local opposition, has dramatically resumed thanks to intergovernmental cooperation.
The Australian Maritime Safety Authority approved an environmental license for SK E&S to drill an offshore gas field on Dec. 15 (local time), according to industry sources on Dec. 18.
As a result, SK E&S, an SK Group energy business affiliate, will soon be able to import LNG from Barossa Gas Field in Australia into South Korea. Barossa Gas Field, located off the coast of northern Australia, has more than 70 million tons of natural gas reserves, far exceeding South Korea’s annual LNG consumption of 40 million tons. This is the first case of a private South Korean company developing an overseas gas field on its own.
Energy industry insiders expect that SK E&S will be able to directly import LNG at a reasonable price with a 20-year contract through the Barossa Gas Field Project. The company has invested 1.5 trillion won since 2012, including taking over a 37.5 percent stake in the gas field, and plans to start commercial production in 2025 going beyond the current process rate of 60 percent.
Drilling at Barossa Gas Field hit a snag in October last year when some Aborigines filed a lawsuit to invalidate the license, citing mythical tales. Local media outlets such as the Herald Sun pointed out that a superstition should not impede the project but Australia’s ruling Labor Party was reluctant to mediate, citing the need to improve the status of the Aborigines.
In response, the South Korean government reportedly activated various diplomatic channels to support the project. In fact, Australia is a major exporter of not only LNG but mineral resources to South Korea. The two countries discussed this issue, including strengthening energy cooperation, when the South Korean minister of industry and the Australian minister of climate change and energy met in July, and continued their discussions through an energy cooperation meeting in Australia in October.
Since then, SK E&S has expanded the scope of public opinion collection, submitted data, and reapplied for approval for the project, which finally resulted in a drilling permit for the company last week, allowing the South Korean company to resume its work. “Going forward, we will directly import about 1.3 million tons of low-carbon LNG every year to increase South Korea’s energy self-sufficiency,” said an SK E&S official.
South Korea relies on imports for all of its LNG and was the third-largest LNG importer (46.38 million tons) behind Japan and China in 2022.