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Brief history of the country

South Korea (the Republic of Korea) forms the south of the Korean Peninsula (Han) bordering North Korea. It is surrounded by the Yellow Sea (west), East China Sea (south) and Sea of Japan (east).

Korea was ruled by the kingdom of Gojoseon until conquered by China in the 2nd century BC. It became divided into 3 Kingdoms from 18 BC. The Silla and the Baekje, a maritime power, ruled the south. In 676 AD they were unified by the Buddhist Silla Kingdom until control of the whole peninsula fell to the Goguryeo in 936, who were replaced by the Joseon dynasty from 1392.

The country repelled invasions from Japan and China and became isolationist. Peaceful for many centuries, it was eventually occupied by Japan from 1905 to 1945 who tried to extinguish its culture.

In 1948, after World War 2, the peninsula was split along the 38th parallel with the north supported by the USSR and the south by the USA. A North Korean invasion then led to the Korean War in 1950. China intervened and an armistice was declared in 1953 with boundaries restored, separated by a Demilitarised Zone. However, no peace treaty was ever signed.

From the 1960s South Korea surpassed the north’s economy and became a regional power, growing rapidly. It has an advanced democracy, a modern cultural outlook, and leading global companies. It was recognised by Russia and China in 1991 and 1992 respectively.

Oil and gas summary

Korea is a mountainous peninsula. South Korea comprises 4 geographic regions. The east contains high mountain ranges and narrow coastal plains. The west is a broad coastal plain with river basins and rolling hills.

The southwest consists of mountains and valleys and the southeast is dominated by the broad basin of the Nakdong River. Around 3,000 islands, mostly small and uninhabited, lie off the western and southern coast with Jeju-do about 100 kms to the south. Jeju-do is the largest island and the site of the highest mountain, Hallasan, an extinct volcano reaching 1,950 m.

South Korea had one offshore gas field, Donghae-1, discovered in 1993 off the south eastern coast in the Sea of Japan. Donghae-1 came onstream in 2004 and was abandoned in 2018, converted to storage. Small new gas developments are forecast by Globalshift in the long term.

South Korea produced small amounts of oil and NGLs from Donghae-1 but appears to have no substantial oil prospects. Onshore it lacks sedimentary basins of sufficient thickness to generate hydrocarbons.

The country imports large volumes of LNG.

Government

South Korea has a presidential system. The president, elected to serve one 5-year term, is head of state and commander in chief of the armed forces. The Cabinet, including the President and Prime Minister, is the highest body in the executive.

The legislative branch is unicameral, consisting of a 300-member elected National Assembly. Members of the National Assembly serve 4-year terms. Local governments contain executive and legislative bodies of their own.

The oil and gas industry is overseen by the Ministry of Trade, Industry and Energy (MOTIE) which was formed from the Ministry of Knowledge Economy in 2013. Korea National Oil Corporation (KNOC) is the NOC, established in 1979 and operating oil and gas fields in many countries.

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Geology and History of Exploration

The Korean Peninsula forms part of the southern edge of the North China Craton (Amurian Plate) which also underlies Manchuria, Western Japan and the Russian Province of Primorsky Krai. The Amurian Plate is moving southeastwards with respect to the Eurasian Plate, colliding with the Philippine Sea Plate in the south.

Since the Korean peninsula lies distant from the margin, it is largely comprised of basement metamorphic rocks and volcanics and has no onshore petroleum potential in South Korea. However, the onshore basement is flanked by the Yellow Sea, the East Sea (Sea of Japan), and the South Sea where extensive continental shelf intra-cratonic basins opened along the western and eastern coastal plain.

In South Korea these are the Ulleung Basin (east), the Jeju Basin (south) and the Yellow Sea Basin (west). All contain sequences of Mesozoic and Cenozoic sediments.

The Ulleung Basin - is located in the East Sea between South Korea and Japan. It has 10 kms of clastic sediments deposited along its southwestern margin. Here the Donghae-1 gas field was discovered in 1997 containing late Miocene shallow marine sandstone reservoirs sealed with silty shales.

The Yellow Sea Basin - the eastern part lies in South Korea with the remainder in China. It includes a number of sub-basins but none have yielded commercial hydrocarbons.

The Jeju Basin - is a Cenozoic basin between South Korea, Japan, and China. The basin is defined by a series of NE-SW trending half-grabens. Basement highs separate two significant sub-basins, Socotra on the southwest and Domi on the east. The southern boundary of the Jeju Basin runs into a Joint Development Zone (JDZ) between Korea and Japan. Again no discoveries have been made in the area.

History - International oil companies began exploring for oil and gas in shallow offshore waters in the 1960s, later followed by Korean groups. In 1971 the Ulleung Basin was divided into 2 blocks (Block 6-1 in the south, Block 8 in the north).

Block 6-1 was first explored by Shell. The company acquired 5,193 kms of 2D seismic data before drilling the first exploration well, encountering only gas shows. KNOC took over Block 6-1 in 1983, collected significant amounts of seismic data, and drilled 22 wells and made one commercial discovery (Donghae-1) in 1997.

The Yellow Sea Basin was divided into 3 blocks (1, 2, and 3) covering various sub-basins. KNOC with international companies drilled 6 wells. In Block 1 KNOC and Texaco acquired 8,520 kms of seismic data and drilled the Haema-1 well. In Block 2 KNOC, Gulf and Marathon Oil acquired 35,468 kms of seismic data and drilled 4 exploration wells. KNOC and Shell carried out exploration of Block 3 from 1970 to 1997 without drilling a well.

The Jeju Basin was divided into Blocks 4, 5 in the south and 6-2 to the northeast. The Socotra subbasin spans the southern part of Block 4 and the Domi basin lies in Block 6-2. International oil companies, including Gulf, Texaco and Shell, began exploration in these blocks in the 1960s.

They obtained 12,781 kms of seismic data and drilled an exploration well in Block 4, 11,995 kms of seismic data and drilled 4 wells in Block 5, and 12,786 kms of seismic data and drilled 3 wells in Block 6-2. Some of the wells had oil and gas shows. Further drilling was carried out in Block 6-2 in 2009.

The Joint Development Zone (JDZ) has been less explored. In 2002, KNOC obtained 19,571 kms of seismic data and 563 sq kms of 3D seismic data and drilled 7 wells, of which 3 had oil and gas shows. KNOC and several oil companies from Japan conducted a joint study of the JDZ area from 2004 to 2009 in an attempt to locate analogies to nearby discoveries in Chinese waters.

From 1980 to 2014 KNOC had acquired over 100,000 kms of 2D seismic data and nearly 5,000 sq kms of 3D seismic data and drilled around 50 exploratory wells. However it was only in 1997 when KNOC drilled the Gorae-5 prospect in the middle of Block 6-1 in the East Sea and discovered a gas and condensate field, naming it Donghae-1.

Donghae-1 lies 60 kms from Ulsan in the southern region and was the country`s first and only commercial development. A feasibility study was conducted after the discovery with 3 appraisal wells and development began in 2001. Facilities consist of a subsea production control system with 4 subsea wells, an offshore platform, topside facilities, an export pipeline, and onshore processing facilities.

A gas pipeline runs 68 kms from the offshore platform to onshore facilities and the field came onstream in 2004. The gas was used domestically in power plants and in industry although daily production only represented about 2% of the country’s total consumption of gas.

Since 2005 KNOC has developed 3 additional pools around the field and in 2014 it started to explore the Donghae-2 gas project, 5.4 kms away from Donghae-1. It drilled one production well (DH 2-1P) in 2015 however, the whole field ceased production in 2018 with the reservoir converted to storage.

After the discovery of South Korea’s only commercial field, exploration by Woodside Energy and KNOC was expanded into deeper waters of the continental slope. They acquired 5,107 kms and drilled an exploration well (Jujak-1) in 2012. In 2014, 504 sq kms of 3D seismic was acquired and one further exploration well was drilled (Hongge-1) without any success.

Elsewhere a large part of the continental shelf has not yet been explored and there are a number of available blocks over the 3 offshore basins.

Production of gas and condensate in South Korea peaked in 2012 and the country is unlikely to return to these modest levels again as no new fields have been located. Some new output may materialise from the Ulleung Basin as exploration proceeds in surrounding areas but Globalshift forecasts that no substantial gas, condensate or oil fields will be discovered over the short or medium term.

In the Yellow Sea Basin KNOC and CNOOC are sharing data to better understand the history and potential. In the Jeju Basin a similar arrangement continues with Japan. However, no commercial discoveries are forecast for either area.

KOREA (SOUTH): SEDIMENTARY BASINS

Globalshift.co.uk (source: Korea National Oil Corporation)