BAI: “Daewang Whale Was Not Sufficiently Verified... Demanded Completion During Yoon’s Term”

[Financial News] The audit found that various problems occurred during the Yoon Suk Yeol administration’s Daewang Whale project, a deep-sea gas field project in the East Sea. The audit also confirmed that former President Yoon Suk Yeol directly instructed officials to bring forward the drilling schedule.
The Board of Audit and Inspection (BAI) released its audit findings on the East Sea deep-sea gas field project on the 16th. It said it had identified seven unlawful or improper matters, including the improper use of a limited competitive bidding process and technical evaluation, as well as efforts to proceed with drilling without sufficient verification.
According to the audit findings, the Ministry of Trade, Industry and Energy (MOTIE) reported the results of the prospectivity assessment to the presidential office in May 2024. It recommended refraining from public promotion, saying the probability of exploration success was highly uncertain at 20% or less.
However, during the presidential office’s internal reporting process, it was decided that the MOTIE minister would report directly to the president and that the results would be announced to the public. MOTIE also proposed presenting the area instead of the resource volume, warning that disclosing the estimated exploration resources could create excessive expectations. Nevertheless, former President Yoon directly announced on June 3 of the same year that there was a high possibility that up to 14 billion barrels of oil and gas were buried there. According to the BAI, this figure was calculated by simply adding together the most optimistic values (P10) for the estimated exploration resources of each of the seven prospects. The probability that all seven structures would succeed in exploration was only 0.000218%, or approximately one in 460,000.
The drilling schedule was also moved forward substantially from the original plan. MOTIE had planned to drill four additional wells by 2029 after the first well, but the presidential office demanded that the schedule be shortened to within May 2027, the end of former President Yoon’s term.
When then-MOTIE Minister Ahn Duk-geun reported a plan to bring forward the completion of drilling to the first quarter of 2028 and explained that political considerations were needed regarding the schedule, former President Yoon reprimanded him, saying, “I am the one who makes political judgments,” and ordered him to revise the plan. Although Ahn believed the schedule was excessive, he ultimately reported a revised plan to drill four additional wells by 2026.
The audit also found deficiencies in the project’s implementation. The geological probability of success for the Daewang Whale structure was 19.1%, lower than the 25% to 32% probability for the Bangeo structure, where gas discovery failed in 2021. However, the BAI pointed out that the Korea National Oil Corporation (KNOC) established its basic drilling plan without sufficiently verifying the estimated exploration resources and probability of success.
KNOC also ordered drilling-rig chartering services before the Investment Risk Committee and the board had reviewed and approved them. The BAI determined that approximately 4.3 billion won in chartering costs could have been saved if the drilling schedule had been adjusted.
The audit also found that, although the requirements for a limited competitive bidding process under the State Contracts Act had not been met, certain companies were selected arbitrarily and allowed to participate in the bidding. The evaluation criteria were also not disclosed to the participating companies.
However, in this audit, the BAI did not determine whether laws or regulations had been violated in connection with MOTIE’s reports to the presidential office or the president’s announcement. The BAI explained, “Because there are no relevant regulations, no separate measures will be taken against the presidential office or MOTIE.”
[email protected] Choi Jong-geun Reporter