South Korea's Yoon approves vast gas and oil exploration

SEOUL (Reuters) -- South Korean President Yoon Suk Yeol gave the green light on Monday to conduct exploratory drilling for potentially vast oil and gas prospects found off the east coast of the nation that is one of the world's largest energy importers.

There is a "very high" possibility the area contains as much as 14 billion barrels of oil and gas, Yoon told a press conference, citing a study he said was reviewed by experts and industry groups.

"Today, I approved the Ministry of Trade, Industry and Energy to go ahead with the drilling for exploration deep in the east sea," Yoon said.

The project, estimated to cost more than 500 billion won ($363 million), will begin near the end of the year in hopes of finding energy reserves by the first half of next year, he said.

The site was off the southeastern industrial port city of Pohang, Yoon added, with an industry ministry official adding that the prospects are in South Korea's Exclusive Economic Zone.

Yoon said South Korea's exploration efforts for oil and gas beginning in 1996 have tapped gas reserves equivalent to about 4.5 million barrels, with commercial development completed in 2021.

The new prospects promise enough gas to fuel the country for 29 years and oil equivalent to four years of consumption, he added.

Energy stocks in Seoul jumped on the news.

Shares of oil refiner SK Innovation closed up 6%, Korea Gas Corporation jumped 30% to a 17-month high, Daesung Energy 117580.KS also hit the daily limit of 30%, and SK Gas 018670.KS climbed 7%.

The potential volume was eye-catching, said Readul Islam, senior vice president of research firm Rystad Energy, but warned, "Only spinning the drill bit will reveal how much oil and gas is actually present."

For the world’s third-largest