South Korea, Woodside May Jointly Explore for Oil, Gas in '07

SEOUL, Nov 7, 2006 (Dow Jones Newswires)

South Korea and Australia's Woodside Petroleum Ltd. (WPL. AU) may start jointly exploring for oil and gas offshore the Korean peninsula next year, South Korea's Vice Minister for Energy Won-Gul Lee said Tuesday.

He didn't give further details on the time frame.

If this pushes through, it would be the first time in more than a decade that a foreign company is exploring for oil and gas in South Korea.

South Korea and Woodside, which have yet to sign an official agreement, are eyeing the Eastern Sea off the Korean peninsula for the exploration, Lee said.

The South Korean government has fine-tuned the law to allow the foreign company to take part in such a project in its territory, he said.

South Korea produces its own natural gas in a block called Donghae-1 in the Eastern Sea. The block produces 50 million cubic feet of natural gas a day, meeting 2% of the country's natural gas needs.

Gas exploration off the country's east coast seems promising following the 1998 discovery of the Donghae-1 block, the production of which began 2004.

Early last year, near Donghae-1, KNOC found another block with estimated reserves of 25 billion cubic feet of gas. Production has yet to start.

In February 2006, KNOC discovered a third block in the area with gas reserves estimated at 10 billion cubic feet.

The country currently operates a total seven oil and gas exploration fields. The Donghae-1 block is the only site in production.

Energy-deficient South Korea is the world's second-largest importer of gas and the fourth-biggest buyer of crude oil.

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