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Potential for Energy Cooperation between Korea and Azerbaijan. Baku, Azerbaijan August 27, 2007 Dr. Sung-Kyu, Lee Research Fellow Korea Energy Economics Institute. Contents. Energy Profiles in Korea Potential for Energy Cooperation Strengthening Energy Cooperation.
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Potential for Energy Cooperation between Korea and Azerbaijan Baku, Azerbaijan August 27, 2007 Dr. Sung-Kyu, Lee Research Fellow Korea Energy Economics Institute
Contents • Energy Profiles in Korea • Potential for Energy Cooperation • Strengthening Energy Cooperation
Korea Ranks in the World ■ Korea as a big energy importer - High oil dependency, rapidly growing natural gas consumption - 5th largest oil importer, 2nd largest LNG and coal importer ■ Energy Consumption Growth for 2005-2020: 2.5% Source: BP(2006)
Primary Energy Consumption by Source • Trend in Consumption Shares (198119902006, %) • • Oil : 58.1 53.8 43.8 • Coal : 33.3 26.2 24.4 • • LNG : 0 3.2 13.3 • Nuclear : 1.6 14.2 16.1
Final Energy Consumption by Sector 2006 173.4 mill. toe • Trend in Consumption Shares (198119902006, %) • •Industrial : 44.948.155.4 • Rsd./Cmrcl. : 40.729.321.2 • • Transport : 9.618.921.1 • Public/Other : 4.83.72.3
Overseas Energy Dependency Bill. US $
Energy Imports in Detail • Major Feature (2006) • • Import Dependency: 96.8% • • Energy Imports: US $ 85.6 billion • • Petroleum Dependence: 43.8% • • ME Oil Dependency: 82.2% • Imports (2006) • Crude Oil : US $ 55.9 billion (888.4 million barrels) - Saudi Arabia, UAE, Kuwait, Iran, Qatar, … • LNG : US $ 11.9 billion (24.3 million tons) - Indonesia, Qatar, Oman, Malaysia, Brunei, … • Coal : US $ 5.3 billion (76.0 million tons) - Australia, China, Indonesia, Russia, Canada, …
Future Energy Challenges in Korea ■ High Natural Gas Demand Drivers • Changes in consumer preference to cleaner and more convenient fuel • Establishment of nation-wide gas network • Environmental regulations to encourage the use of natural gas • Increased use of natural gas in the power generating sector with increased electricity demand ■ Continuous Increases in Oil demand • Oil demand is projected to grow by 2.4% per annum, 2005~2020 • Oil dependency will decrease … 50.6% in 2001 44 % in 2005 38 % in 2020 • Oil will remain to be a major fuel due to the increased demand in the transportation and industry sectors
330.7 mtoe 293.9 mtoe 261.4 mtoe (Unit: %) 229.3 mtoe 38.0 39.5 42.3 Oil 44.3 22.3 Coal 22.3 24.9 LNG 23.9 15.2 15.0 12.8 13.1 Nuclear 20.2 19.5 16.9 16.0 RE & Others 4.3 2.2 3.1 3.6 2005 2010 2015 2020 Energy Outlook in Korea • TPES by Source (%) : 3.7 % p.a. • • Oil & Coal decrease, while LNG & Nuclear increase • • Oil remains as the dominant fuel until 2020 & beyond • Final EnergyConsumption by Sector ( 2005 2020, %) • • Industrial : 55.2 54.4 • Residential : 14.1 12.7 • • Transport : 20.6 21.4 • Commercial : 7.9 11.4
Energy Policy of Korean Government ■ Positive Governmental Support to Energy Resources Development Companies • Support to exploration and development company • Induce private company to overseas resource development business • Training Expert • Financing Energy Investment ■ Promotion of Bilateral Energy/Mineral Resources Cooperation with Resource-endowed Countries • Energy/Resources Summit Talk • Establishment of Inter-governmental cooperative channel : Energy and Mineral Resources Cooperation Committee ■ Strengthen Energy Supply Security • Diversification of energy resources and import sources
Movement of Oil Development Region North Sea East Siberia West Siberia Central Asia North America Middle East East Asia West Africa S&Cent. America new development region stagnant/increasing production region decreasing production region
Energy Policy of Korean Government ■ Strengthening Strategic Cooperation • Development of a close cooperative relationship with Azerbaijan • Participation in exploration and development of energy fields : oil, gas, coal, mineral resources • Security of supply of energy and diversify import sources : abundant resources, huge export potential of oil and gas : oil and gas transportation hub in Caspian region : friendly investment environment for foreign company • Economic Benefits : spill-over effects : effective development of resources throughout technology transfer and foreign investment
Potential for Oil Export Source: EIA(2006)
Energy Cooperation Strategy ■ Comprehensive Cooperation • In energy/resource, plant and construction, manufacturing industry, and service sectors • In governmental, commercial, and research levels : officials meeting, expert forum, business forum • Cooperation can provide a win-win opportunity for both countries : lots of potential opportunities for cooperation on energy and energy-related business ■ Strengthening Inter-governmental Cooperation • Energy trade requires stable political relationships • Improve investment environment : Establishment of investment-friendly environment : Reduce investment risks : Inter-governmental supporting scheme for Investment promotion and protection
Energy Cooperation Strategy ■ Creation of Successful Business in Energy Sector • Policy commitment by both governments : concerted efforts : confidence Building : accumulation of cooperation experience • Provide significant momentum to energy development and further economic cooperation : availability of additional projects in offshore and onshore regions : development and extension of cooperation projects in industry sectors
Energy Cooperation Strategy ■ Establishment of Working Groups • Expert groups in several sector • Collaborative research and activities : specify feasible joint projects and actualize them : execute joint studies and activities(seminars, symposia, conferences, workshop) • Inter-governmental management and support ■ Exchange Visit of Experts of both countries • Promote human resources development • Enhance closer cooperation • Capacity building and information exchange : exchange program for training and educational courses • Governmental, commercial, and research sector interchange • Establishment cooperation network