Renewed Support for Overseas Resource Development
The Export-Import Bank of Korea (Korea Eximbank) has finally decided to provide a loan of US$330 million to an SK E&S consortium promoting a gas field project in Australia.
The bank made the loan decision at a credit review committee on May 31.
SK E&S is participating in a gas field development project in Barossa, located in the Bonaparte Basin of the Timor Sea offshore Australia, together with Australia’s Santos, and Japan’s energy company JERA. If the project goes as planned, about 1 million tons of liquefied natural gas (LNG) per year can be brought into Korea beginning from 2025. It can be used for blue hydrogen production and other purposes.
The Korean government decided to provide financial support for the Barossa project last year. Korea Trade Insurance Corp. decided late last year to provide financial support worth US$330 million. However, opposition from environmental groups has compelled Korea Eximbank to delay its decision. Earlier in March, residents of Tiwi Island in northern Australia and the Lalakia people filed a lawsuit with the Seoul Central District Court against Korea Eximbank and Korea Trade Insurance Corp, demanding that the two companies stop public lending to the Barossa project.
However, as the new Korean government is determined to support private companies' overseas resource development projects, the mood has changed.
The lawsuit filed by Aboriginal Australians has recently been dismissed by the court, which reduced Korea Eximbank’s burden. “Even if the court bans public financial support for the Barossa project, the companies can still promote the project by raising funds in other ways,” said the Seoul Central District Court, dismissing the suit.
SK E&S plans to develop the gas field in an eco-friendly way. The gas field is expected to emit 3.5 million tons of carbon dioxide per year. SK E&S plans to remove 2 million tons of the emissions through carbon capture technology and offset the remaining 1.5 million tons through carbon credit purchases or reforestation projects.
The decision to provide financial support for the Barossa project is expected to boost the private sector’s overseas resource development.