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Potential for Energy Cooperation between Korea and Azerbaijan

Potential for Energy Cooperation between Korea and Azerbaijan. Korea-Azerbaijan Business Forum Baku, Azerbaijan May 19, 2008 Ji-Chul Ryu, Ph.D. Korea Energy Economics Institute. Contents. Energy Profiles in Korea Potential for Energy Cooperation. 2. Energy Profiles in Korea. 3.

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Potential for Energy Cooperation between Korea and Azerbaijan

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  1. Potential for Energy Cooperation between Korea and Azerbaijan Korea-Azerbaijan Business Forum Baku, Azerbaijan May 19, 2008 Ji-Chul Ryu, Ph.D. Korea Energy Economics Institute

  2. Contents • Energy Profiles in Korea • Potential for Energy Cooperation 2

  3. Energy Profiles in Korea 3

  4. South Korea in Northeast Asia

  5. 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% 5 Source: BP(2007)

  6. Economic Growth and Energy Demand Increase 6

  7. Primary Energy Consumption by Source • Trend in Consumption Shares (198119902006, %) • • 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 7

  8. Final Energy Consumption by Sector 2006 173.4 mill. toe • Trend in Consumption Shares (198119902006, %) • •Industrial : 44.948.155.4 • Rsd./Cmrcl. : 40.729.321.2 • • Transport : 9.618.921.1 • Public/Other : 4.83.72.3 8

  9. Overseas Energy Dependency Bill. US $ 9

  10. 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, … 10

  11. 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 11

  12. 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 12

  13. II. Potential for Energy Cooperation 13

  14. Energy Industry Structure of Korea Private Public Government Oil Companies - E & P - Importers - Refiners - Distributors KNOC - E & P - Strategic Oil Stockpiling City Gas Companies - Retailers - Territorial Monopolies KOGAS - LNG Importer - Wholesaler KEPCO - Generator - Transmitter - Distributor KOCOAL - Producer Coal Companies - Importers - Producers - Distributors District Heat Supplier

  15. Energy Capacity Expansion Unit 1980 1990 2006 Total Energy MMTOE 43.9 93.2 223.4 per capita TOE 1.15 2.2 4.8 Generation capacity GW 10.4 24.1 70.4 Generation TWh 40.1 118.5 367.6 Refinery capacity thousand bbl/d 640 840 2,772 Oil imports MMbbl 196.7 409.6 1,083.9 LNG Imports thousand M/T - 2,291 25,222 City gas consumer Thousand 99 1,220 12,141 Coal production million ton 18.7 19.8 4.6 Coal imports thousand M/T 7,723 23,969 76,001 Source: KEEI(2007), Yearbook of Energy Statistics

  16. Petroleum Products Exports / Imports (Million b/d) Export Import [MKE, 2007]

  17. 65,514 44,566 27.0% 28.2% 9.4% 26.6% 8.4% Power Generation Capacity (MW) 60000 Nuclear 50000 Coal 40000 Oil Gas 30000 Hydro 21,111 20000 9,835 10000 2,628 367 0 1961 1971 1981 1991 2000 2006

  18. 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 18

  19. Potential for Oil Export of Azerbaijan Source: EIA(2007) 19

  20. Oil Pipelines in Caspian Region ■ Strategic value of Azerbaijan : Oil and Natural gas transportation Hub in Caspian region (BTC oil pipeline, BTE gas pipeline, Trans-Caspian gas pipeline) Source: EIA(2007) 20

  21. Azerbaijan Offshore Fields (Inam field) ■ Azerbaijan attracted lots of foreign investors to operate in offshore fields in accordance with PSA ■ Korean consortium participated in Inam field development project in 2007 21

  22. GDP by Industry of Azerbaijan ■ To keep stable economic development, massive domestic/foreign investments and industry diversification are required. 22

  23. Energy Cooperation Strategy ■ Comprehensive Cooperation • In energy/resource and economic sectors : Package deal that combines energy resources development and value-added converting process of natural resources (petroleum/gas chemical, metal processing) : energy resources development and construction of power plants, SOC infrastructure, industrial facilities, ports & shipyard and new town development. • In governmental, commercial, and research levels facilities. : officials meeting, expert forum, business forum : Improve investment environment • Cooperation can provide a win-win opportunity for both countries • Provide significant momentum and Create successful business in energy sector : availability of additional projects in offshore and onshore regions : development and extension of cooperation projects in industry sectors 23

  24. Thank you very much Gamsa’hamnida

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