President Lee questions 500B deficit, gambling project deregulation, and <5% oil import contributions

President Lee Jae-myung strongly criticized the Korea National Oil Corporation on the 17th for its inadequate feasibility review of the East Sea deep-sea gas field, Blue Whale project.

During a work report session held at the Government Complex Sejong in the morning of the same day under the Ministry of Trade, Industry and Resources, President Lee Jae-myung grilled audited institutions, including the Korea National Oil Corporation and Kangwon Land, with intense questions.

◇"Gambling is a sign of a nation's downfall... Bring evidence to reduce harm"

First, President Lee questioned the acting head of Kangwon Land about statistical evidence for the reported reduction in gambling addiction harm. When the acting head failed to provide precise data, President Lee asked, "Have you conducted any research?" and instructed the Blue House to report on whether harm is increasing or decreasing and on policy efforts. President Lee stated, "One of the terminal symptoms of a nation's collapse is internal laziness, predatory lending, and gambling with the mindset of 'it'll work out.' While sports and leisure have their necessity, we will examine which aspect is more significant."

Regarding Kangwon Land's proposed "Global Complex Resort K-HIT Project," the acting head explained that the project would create 15,000 new jobs and requested regulatory relaxations, including expanded casino area limits, reduced entry-day restrictions, and increased betting limits (300,000 Korean won to 1,000,000 Korean won). President Lee asked, "Is the project unprofitable without deregulation?" The acting head replied, "It is not highly profitable." President Lee responded, "This is a risky business. If deregulation ensures profitability, that seems like your personal opinion. Have the relevant departments review it, and if the conclusion is unreasonable, bring it to the Blue House."

◇"Explanation of deficit causes lacks logic... You can't be unaware"

President Lee then questioned the acting head of the Korea National Oil Corporation about its management performance. Asking, "Is this the famous oil corporation?" he inquired about this year's projected deficit and its causes. The acting head reported that while the corporation earned 1.27 trillion Korean won in operating profit last year, it expects a net loss of over 500 billion Korean won this year due to falling oil prices and interest costs.

President Lee pointed out, "Even during last and the previous year's profits, financial costs were similar. It's illogical to blame the deficit solely on interest costs." The acting head identified falling oil prices as the main cause, noting the corporation's break-even point for its oil fields is US$75 per barrel. President Lee remarked, "Compared to other countries' production costs of under US$40-50 per barrel, your costs are high. Profitability disappears above US$70."

◇"Can't you estimate Blue Whale's profitability... Avoid projects with too many variables"

Regarding the East Sea deep-sea gas field (Blue Whale) project, President Lee asked, "Have you estimated production costs?" When the acting head replied, "Exact figures are unavailable due to many variables," President Lee countered, "Shouldn't you avoid projects with too many variables?" He added, "How could you plan to invest thousands of billions of Korean won without knowing if the project is profitable or has development value? It's obvious to calculate value by comparing reserves, production costs, and international oil prices." The acting head responded, "We believe the project is economically viable with around 1 trillion Korean won."

President Lee asked about resolving the capital impairment (21 trillion Korean won in debt). The acting head outlined plans to restructure and focus on high-quality assets. President Lee cautioned, "It's not as easy as you think. With oil prices likely to keep falling, the outlook is poor." He also asked about the contribution of the corporation's overseas oil fields to domestic imports, to which the acting head replied, "Less than 5%."

President Lee Scolds Oil Corporation on Blue Whale Feasibility