December 6, 2002, Yeouido, Seoul.
Standing in front of the large floor-to-ceiling window of his office, Seok-won looked down at the city, now completely blanketed in white from the snow that had been falling since morning, as he spoke on the phone with Choi Gyu-wan, the president of Bluehole Energy, who was in Paris, France.
"Did you successfully finalize the contract with Total?"
[TL/n - TotalEnergies (formerly Total)]
Unlike Seok-won, who asked calmly, President Choi Gyu-wan responded in a slightly excited voice.
[As I mentioned, we have completed signing the contract to acquire the entire 40% stake in the Dalia offshore oil field that Total held, for 370 million dollars.]
"Good work."
The Dalia oil field was an offshore field located about 84 miles (approximately 135 kilometers) off the coast of Angola in southwestern Africa.
It was a deepwater oil field buried beneath the ocean at a depth of 1,500 meters, discovered in 1997.
Although it was a massive, mammoth-class oil field with estimated reserves reaching 1 billion barrels, full-scale development had not yet taken place due to the extreme difficulty of extraction at such depths, along with various local conditions.
'The Angolan civil war, which dragged on for as long as 27 years and only ended earlier this year, certainly had a negative impact—but above all, the biggest reason is that it simply isn't profitable.'
Due to the nature of deepwater oil fields, production costs were inevitably high, typically ranging from $15 to $20 per barrel.
'With international oil prices hovering around $20 to $23, if production costs are this high, then even after going through all the trouble of extracting the oil, it would only result in a loss.'
As a result, despite discovering such a massive oil field, they had not proceeded with development and had simply left it untouched until now.
"So, including the shares acquired from the Angolan government, ExxonMobil, and BP, we've now secured 100% ownership of the Dalia offshore oil field, correct?"
[That's correct.]
Typically, in exchange for granting exploration and development rights, the government of the country where the oil field is located—or its state-owned enterprises—retains a certain percentage of the stake.
The Dalia offshore oil field was no exception.
Angola's state-owned oil company, Sonangol, had held a 23.33% stake, but this time, along with Total, it sold all of its shares to Bluehole Energy, owned by Seok-won.
'The Angolan government may be corrupt, but more than anything, they likely believed that at current oil prices, developing the Dalia offshore oil field wouldn't yield any profit. That's why they handed over their shares.'
However, if they had known that this was the bottom and that, before long, international oil prices would surge wildly for several years, ushering in a major upward trend, they would never have sold their stakes.
Once oil prices skyrocketed and surpassed $100 per barrel, it was certain that both the Angolan government and Total would regret selling off all their shares, beating their chests in frustration.
As Seok-won wore a deep smile, President Choi Gyu-wan asked in a cautious voice:
[Securing a massive oil field with estimated reserves exceeding 1 billion barrels is certainly a good thing, but with oil prices being low, development will be difficult for the time being. I wonder if we might have paid too much for the stake.]
"It's not that we overpaid—we simply picked up a diamond lying on the ground for a bargain."
[Excuse me? I'm not quite sure what you mean by that....]
President Choi Gyu-wan asked back, clearly puzzled.
Since he would come to understand naturally with time anyway, Seok-won chose not to explain and instead changed the subject.
"Last time, you mentioned that for deepwater oil field development, FPSOs are more efficient than fixed platforms, right?"
[That's correct. Unlike fixed platforms, which require building structures up from the seabed, an FPSO—being essentially a large vessel—is fully constructed at a shipyard and then transported to the site for immediate installation. This significantly reduces both costs and construction time, and most importantly, since there are no depth limitations, it is well-suited for deepwater oil field development.]
"Since the crude oil pumped up from subsea wells can be processed on-site and stored in tanks within the vessel before being directly offloaded onto tankers, we can also save the cost and time of laying pipelines to shore."
[Typically, it can store between 1 million to 2 million barrels of crude oil, so as you mentioned, the extracted oil can be sufficiently transported using tankers alone without the need for separate pipelines.]
The farther an offshore oil field was from land, the more enormous the cost required to build transportation pipeline infrastructure, making this an exceptionally significant advantage.
However, it wasn't all advantages.
Because FPSOs are designed to handle extraction, storage, and offloading all in one place, their structure becomes highly complex, and their construction costs are extremely high—reaching trillions of won per vessel.
"Place an order with a domestic shipbuilder to construct an FPSO so we can start producing crude oil as soon as possible."
[You mean immediately?]
Unlike President Choi Gyu-wan, who was startled, Seok-won instead went even further and added,
"Alright. Since we're also in the process of acquiring stakes in other offshore oil fields, it would be better to just sign a contract for around ten vessels at once. That way, placing a bulk order should allow us to reduce the construction costs somewhat."
[W-wait a moment, please, Chairman!]
President Choi Gyu-wan raised his voice in alarm.
[Even if we estimate $1 billion per vessel, ten ships would require $10 billion in construction costs. Is that even possib—!]
"With the current exchange rate at around 1,200 won, that comes out to roughly 12 trillion won. That's not particularly expensive."
[…Excuse me?]
Even when faced with the staggering figure of 12 trillion won for FPSO construction—not 120 billion, but a full 12 trillion—Seok-won dismissed it as if it were nothing. Left speechless, President Choi Gyu-wan could only open and close his mouth in shock.
No matter how bold Seok-won was, and even if he was the richest super-rich individual in the world, 12 trillion won was not an amount that could be spent lightly—making his reaction all the more astonishing.
"I'll transfer $1 billion to your account first, so go ahead and secure the contract."
[If we spend that much to extract crude oil, the production costs will become too high. At current oil prices, we wouldn't just fail to make a profit—we'd end up bearing massive losses.]
President Choi Gyu-wan advised in a serious tone.
[Instead, how about waiting until the economy recovers and observing the trend in oil prices? Rather than constructing new FPSOs, we could lease them and begin production first.]
It was a reasonable approach that could significantly reduce risk compared to investing enormous construction costs to build ten brand-new FPSOs.
'If I didn't know that international oil prices would skyrocket like crazy over the next six years, I would have followed President Choi's suggestion.'
However, considering that oil prices would surge to more than five times their current level, placing as many FPSO orders as possible now would allow them to sell crude oil at high prices when the market spikes.
Moreover, once oil prices soared, the cost of FPSOs used to extract crude oil would also skyrocket, making this the last opportunity to build them at the lowest possible price.
Knowing what lay ahead, Seok-won spoke firmly.
"As I said before, oil prices are about to hit bottom and enter an era of high prices. If we want to properly capitalize on the oil money, then we need to prepare from now—so do as I say."
President Choi Gyu-wan was already well aware that international oil prices were currently low.
However, for Seok-won's plan to turn a profit, crude oil prices would need to exceed at least $35 per barrel—and he honestly had his doubts about whether that would be possible.
Still, Seok-won's resolve was so firm, and since he was not taking out loans but instead providing the funds in cash directly into the account, there was little room left to object.
Though he worried that such an astronomical sum—12 trillion won—might end up being wasted, President Choi Gyu-wan had no choice but to follow the instructions.
[Understood. I will proceed as you instructed.]
"Good."
Seok-won spoke with a satisfied expression.
"Then proceed quickly with acquiring stakes in the other oil fields as well."
[Yes. Understood.]
After ending the call and lowering his phone from his ear, Na Seong-mi knocked and entered the room as if she had been waiting.
"Chairman, Director Choi Ho-geun from the Capital Management Division has arrived."
"Tell him to come in."
"Yes, sir."
A moment later, Director Choi Ho-geun, dressed in a suit, entered the chairman's office and bowed politely toward Seok-won, who was standing in front of the floor-to-ceiling window.
Seok-won gestured with his chin toward the leather sofa placed in a sunlit spot and said,
"Let's sit and talk."
"Okay."
After walking over, Seok-won took the central seat first, and Director Choi Ho-geun followed, settling onto the sofa on the right.
"I noticed earlier that the euro exchange rate has risen to 1.18 against the dollar."
Seok-won asked with one leg crossed, and Director Choi Ho-geun replied,
"It faltered briefly due to the war, but it has regained strength against the dollar and continues to maintain an upward trend."
Seok-won gave a small nod.
"Once the Iraq war ends and President Gallant begins full-scale economic stimulus from next year in pursuit of reelection, a massive amount of dollar liquidity will be released, which will push the value of the euro even higher in relative terms. So keep holding the position."
"Understood."
"This time, you invested in oil futures together with the Eldorado Fund and made quite a profit, right?"
At that, Director Choi Ho-geun responded with a faint smile.
"Yes. We made over 500 million dollars, and we've reinvested all of it into long-position bets."
"Then how much have you wagered?"
"Using leverage, it comes to about 2.85 billion dollars."
Director Choi Ho-geun immediately added,
"The Eldorado Fund's position in the futures market has become too large, so instead of oil futures, we invested in oil company stocks and call options."
A call option refers to the right to purchase a specific asset at a predetermined strike price.
"Since the scale of capital in motion has grown much larger than before, it's better to diversify the bets separately so we don't eat into each other's returns. That was a good call."
At Seok-won's praise, the corners of Director Choi Ho-geun's mouth lifted slightly.
Leaning back into the soft sofa, Seok-won naturally moved on to the main point.
"I asked you to come because there's something I need you to do."
"Just give the order."
Director Choi Ho-geun replied confidently.
Pleased with his attitude, Seok-won allowed a slight smile to form before his expression turned serious again.
"How much cash does the Capital Management Division have available right now?"
"Most of it has already been committed alongside the Eldorado Fund, so we only have about 50 billion won left."
After gauging Seok-won's reaction, Director Choi Ho-geun continued,
"But if necessary, we can pull in an additional 200 billion won in cash within three to four days."
At that, Seok-won shook his head, his fingers interlocked.
"That won't be necessary. Then use the available cash to purchase as much stock of ST Co. as possible."
"Yes, understood."
Director Choi Ho-geun followed the instructions without raising any particular objections.
"And secure sufficient funds in advance. When I give the order again, sweep up additional shares of ST Co. until we reach a 10% stake."
"…?"
Startled, Director Choi Ho-geun's eyes widened, and he asked cautiously,
"Are you… planning to acquire the ST Group?"