The head of a London-based energy firm that signed a deal to search for oil off North Korea said yesterday he hoped to start exploring in a year but was closely monitoring tensions on the peninsula.
Aminex PLC executive chairman Brian Hall said he expected "field work in about a year" off the communist nation's east coast and aimed to "find substantial reserves".
However, relations on the peninsula have become strained after North Korea was accused of carrying out a torpedo attack on a South Korean warship in March that left 46 sailors dead and stoked fears of an armed conflict.
Pyongyang has denied involvement in the sinking and threatened war in response to a trade suspension and other reprisals by the South.
Asked about the timing of the North Korea contract, Mr Hall said: "We have been working with (the) North Koreans for over a decade and an agreement such as the one we have recently signed takes many months to negotiate".
He added: "Naturally we will keep a very close eye on the tensions on the peninsula, as we have done during previous incidents, but our project is of a long-term nature and well thought through."
Aminex announced last week that an associate company had signed a 10-year contract with North Korea to search for oil in an area of about 50,681 square kilometres in the Korean East Sea.
Mr Hall declined to give an estimate of the potential deposits. The contract was signed by Korex - a 50-50 venture between Aminex and Singapore-registered Chosun Energy - and the Korean Oil Exploration Company, the North's state oil firm.
Victor Shum, an analyst with energy consultancy Purvin and Gertz, said there was every chance that oil would be found in the area but stressed the reserves must be of a significant size in order for exploration to progress further.
"The question is whether any oil reserves that may be discovered there are going to be economically viable to extract," Singapore-based Mr Shum said.
"I think there has been interest certainly by oil companies so there is therefore a possibility of something there. So far the production isn't large," he said.
Aminex, with listings on the London and Irish stock exchanges, describes itself as an upstream oil and gas company with concessions in several countries including the United States, Kenya and Egypt.
According to a filing with Singapore's Accounting and Corporate Regulatory Authority obtained by AFP, Aminex's partner Chosun Energy is an investment holding company with a paid-up capital of $1.2 million.