Korea Gas Corp. (Kogas) shares plummeted by as much as 15% on Friday following news from the government that initial drilling results from a highly anticipated offshore oil and gas field were underwhelming. This sharp decline marked the largest drop since December, wiping out the gains made since the discovery was first announced last June. Other oil and gas stocks in South Korea also experienced losses, with Posco International Corp. falling by 6.3% and SK Gas Ltd. dropping 2.6%.
The country’s energy ministry revealed late Thursday that one of the seven offshore drilling prospects showed some indications of gas. However, the gas levels were deemed insufficient to justify the field’s commercial development. The ministry stated that while these early results were disappointing, they would be used to refine exploration strategies for the remaining sites. More detailed findings are expected to be released in May or June.
South Korea’s oil and gas production has historically been limited, so the discovery near the port city of Pohang last summer generated significant excitement. The geological study conducted at the time suggested that the offshore field might hold up to 14 billion barrels of oil and gas. President Yoon Suk Yeol had touted the find as a major breakthrough for the nation’s energy prospects.
Kogas’ stock surged by nearly 30% following the announcement of the discovery. However, the excitement quickly began to wane as the geological study was linked to ACT-Geo, a small and relatively unknown Houston-based firm led by Vitor Abreu. Abreu made headlines during his visit to Seoul last summer, where he tempered expectations, acknowledging the high risks involved in such exploratory projects despite the promising potential of the field.
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