Wednesday, 29 October, 2025 / Edition 82

I am excited about the start of the new NBA season. With the young Rockets teammates getting the veteran superstar Kevin Durant, I hope they can make a deep run into the playoffs this year.

For now, let’s look into a couple of energy newsbytes from the past week.

Shangyou Nie

Editor, Well Read

BP and ExxonMobil Are Reportedly Bidding for Korean Offshore Acreage

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According to local press, BP, ExxonMobil and other international companies have submitted bids to become KNOC’s partner(s) for deepwater oil and gas exploration and development in offshore South Korea. This is yet another example of IOCs pursuing overseas growth opportunities.

The latest:

• Korean state company KNOC is evaluating bids from international oil companies, including BP and ExxonMobil.

• Local press reported that BP is emerging as a front runner, according to Upstream.

• Earlier reports suggested that Aramco, Petronas, and ENI were potential partners, though it is unknown whether these three have submitted bids.

Bid round background:

• Since April, KNOC has launched an invitation for IOCs to join four exploration blocks in the frontier Ulleung Basin, southeast of Korea.

• These four contiguous blocks are 6-1S, 8/6-1W, 6-1E and 8NE.

• KNOC has asked S&P Global to help run the bid round.

• Two reported criteria for IOC bidders are:

  1. Having operated a minimum of 100,000 barrels per day of deepwater production, or

  2. Having partnered with KNOC within the past three years

• International players can hold up to 49 percent equity, with KNOC holding a minimum of 51 percent.

Korea’s first commercial fields:

• In 1998, KNOC discovered the first commercial gas field Donghae-1 (East Sea) in Block 6-1, about 60 kilometers offshore from Ulsan.

• KNOC brought the gas field on stream in 2004 and is producing gas and condensate.

• In 2014, KNOC initiated the Donghae-2 gas project through a subsea tie-back to the Donghae-1 platform.

About KNOC:

• KNOC was established in 1979 to take charge of domestic E&P activities in South Korea.

• Since then, it has also established overseas production.

• As of 2024, KNOC has 931 million barrels of oil equivalent 2P reserves and produced 136,000 barrels oil equivalent per day.

• KNOC is in 11 overseas countries (United States, Canada, Venezuela, Peru, United Arab Emirates, Nigeria, Libya, Yemen, United Kingdom, Kazakhstan, and Vietnam).

• In the beginning of 2025, KNOC drilled an unsuccessful high-impact deepwater wildcat, Blue Whale-1, in offshore Korea.

• Pre-drill estimates for the large structure predict the potential to hold 14 billion barrels of oil equivalent, with 75 percent change being gas.

About Korean offshore E&P:

• In offshore Korea, Gulf Oil, Shell, and Koam Corp. conducted exploration activities in the shallow water areas in the 1970s and 1980s.

• Earlier exploration efforts did not find any commercial discoveries but found gas shows.

• Korea divides its offshore areas into 12 blocks and a Joint Development Zone.

• KNOC is the only license holder in Korea’s offshore for now. It has seven blocks.

• Block 6-1 is divided into four sub-blocks. Three out of four are held by KNOC.

The bigger picture:

• As many countries and companies re-focus on oil and gas, there is a resurgence of IOCs competing for overseas opportunities.

• For BP and ExxonMobil to enter South Korea, it would mean new country entry for both majors.

Something to consider: I always wondered what oil/gas potential might be for the basins west of the Korean Peninsula. Further west, China’s Bohai Gulf is a major offshore oil province. Will someone be able to make a breakthrough, politically and technologically, on the Korean side someday?

For more details on the Korean offshore blocks, read here.

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Another Arbitration: Petrobras Loses to Brazilian Government Agency ANP

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The ICC issued a ruling for ANP in an international arbitration case against fellow national oil company Petrobras and partners, according to Brazil’s Solicitor General’s office last week. The ruling was in an unusual dispute concerning two oil fields in the Santos Basin and allows the Brazilian government to keep $4 billion in tax payments.

The lawsuit:

• The case stemmed from actions taken nearly 15 years ago, when Petrobras declared commerciality for two oil fields, Tupi and Cernambi in Block BM-S-11 in the Santos Basin.

  • Tupi is Brazil’s second largest oil field with 8 billion barrels of reserves.

  • Tupi has been Brazil’s largest producing field with more than 1 million barrels of oil per day.

• According to Brazilian law, the bigger the oil reservoirs, the higher the tax rates and participation fees.

• ANP argued that the two fields should be filed as one within the legal ring fence of Block BM-S-11, even though there appears to be no dispute that two fields are on two different geologic structures.

• ANP alleged that Petrobras split the fields so it and its partners could pay billions fewer in taxes.

Background:

• Petrobras (65 percent) is the operator for the Tupi Field, with Shell (25 percent) and Galp Energia (10 percent).

  • Shell entered the block through its acquisition of BG Group in 2015.

• The case was initially fought inside a local Brazilian court, which ordered Petrobras and its partners to put aside judicial deposits to cover the disputed payments.

  • Petrobras and its partners have placed 22.2 billion reais (or $4.1 billion) in deposits since 2019.

• ANP rejected a separate commercial declaration for the Cernambi Field, arguing that it should be treated as part of the Tupi ring-fence.

The verdict:

• The ICC sided with ANP’s opinion that the two oil fields should be kept within one block ring fence.

• It also rejected Petrobras’ request to replace judicial deposits with bonds.

• The ICC did side with Petrobras in its request to make future payments via methods other than cash, if certain conditions are met.

Why this case is unusual:

• Domestic disputes between governments and companies tend to be handled within the country. It is unusual for ANP and Petrobras to seek international arbitration over the dispute.

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✉️ To get in touch with Shangyou, send an email to editorial@aapg.org.