Energy Industry Development Profiles in Korea Korean Energy Day The International Energy Forum and the Korean Embassy in Saudi Arabia The Kingdom of Saudi Arabia December 05, 2012 Ji-Chul Ryu, Ph.D. [email protected] Korea Energy Economics Institute 1 Contents 1 Overview 2 History of Energy Sector Development 3 Current Status of Korea’s Energy Sector 4 Long-term Energy Outlook Korea at a Glance . Land Area: 99,646 km2 • More than 70 %: Unproductive hill/mountains . Population: 49.8 million • High population density • Skilled man powers . Moderate Climates • Cold winter: Low productivity in agricultures ⇒ Economic Development Strategy: • High value-added industries • Export to international markets . GDP (2011) • per capita: US$ 22,489 3 Energy Demand and Economic Growth in Korea (1970 F.Y=100) 1600 1,081.6 trillion won 1400 GDP (7.2%, pa) 1200 271.4 Mtoe 1000 800 600 Energy (6.6%, pa) 400 200 61.9 trillion won 19.7Mtoe 0 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 4 Final Energy Demand by Sector in Korea Industrial Sector Residentail & Commercial Sector Transport Secror Public 200 2.3% 180 160 Demand Driver Growths (1985 - 2011) 18.5% Pig iron: 9 → 35MMT 140 Cement: 21 → 52MMT Ethylene: 0.6 → 6.8 MMT 120 Cars: 1.1 → 18.4 mill 18.9% 100 80 60 40 60.3 % 20 - 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 5 Domestic Energy Production in Korea Million TOE Coal Hydro Renewable 16 . Limited Energy Resources • Domestic Reserves: Anthracite, hydro, renewable 14 • No oil, natural gas, bituminous coal, uranium . Import dependence: 96.5 % 12 • Energy import : US$ 172.5 billion (2011) 10 8 6 Korea as a major energy importer 4 • Oil : 5th, 872.4 Mil. bbl(2010) • LNG : 2nd, 32.6 Mil. tons (2010), 8th Gas import 2 • Coal : 2nd, 119.3 Mil. tons (2010) - 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 6 Energy Mix Changes in Korea Million TOE Coal Petroleum LNG Hydro Nuclear Renewable 275 250 225 200 175 Fuel Mix Changes by source (1980 → 1990 → 2011) 150 . Oil : 61.1 → 53.8 → 38.5% . LNG : 0 → 3.2 → 17.5% 125 . Coal : 30.1 → 26.2 → 28.8% 100 . Nuclear : 2.0 → 14.2 → 12.2% 75 50 25 0 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 7 Import Supply(primary) Transf. & Loss Consumption(end-use) Energy dependency 96.5% 271.4 million toe 71.5 million toe 199.9 million toe (171.8 billion $) (100%) [26.3%) (73.7%) Crude Refining 2.8 million b/d Industrial Middle 926.8 million bbl 60.3% East(87%) • Saudi (31%) City Gas Base materials • UAE (9%) OIl 38.5% (e.g. naphtha) • Kuwait (13%) 19.0 million ton 31.6 % • Iran (9%) Asia (11.8%) Thermal Residential Africa (0.1%) 1,785.8 1000 +Commerci 36.7 million ton TOE al Qatar L N ·Oman·Ind 17.5% 18.9% onesia G Electricit Transportation Bitumi y 18.5% 116.1 million 4,992 ,100 nous million kWh Australia·China ton Public 2.3% ·Indonesia coal 26.3% Nuclear 30.9% Bituminous 38.8% Electricity Uranium 827.9ton U LN 21.8% G Tr Russia Nuclear Oil 4.8% Industrial Res. + Pu ·US·Aust an 12.2% Anthracite 53.1% Com. blic ralia 8.8 million ton 0.6% s. 41.9% 4.5 China Hydraulic 1.6% 0. ·Australia·Vietna Anthracite 2.5% % m Renewables 1.4% 5 Domestic 3.5% Hydraulic·Renew % ables 2.9% 8 Energy Development History in Korea . 1970 – 80’s: Government Intervention • Petroleum Business Fund in 1980 → Energy-Resources Business Special Account in 1995. • Fuel diversification away from oil Oil → Natural gas and nuclear, • High investment for energy facilities (Refineries and power plants) . 1990 – 2000’s: Network, Market Mechanism, Environment • Modernization of energy infrastructure, Construction/expansion of nationwide natural gas and oil trunk pipeline systems District heating/cooling system for household/commercial buildings • Strengthening the market mechanism, Petroleum prices were completely liberalized in 1997. Energy security through improving market environment • Increased environmental concerns Energy conservation and efficiency improvement policies, Renewable energy sources Overview of Korean Economy and Energy Sector Change 1960’s 1970’s 1980’s 1990’s 2000’s . Launching . Development of . Industrialization . Industrial . Development of economic high-tech industries development - Rapid growth diversification such as IT, ICT low-carbon of heavy & industry and - Rapid growth chemical industry . knowledge- of light industry Rapid economic . OECD member based industry ※ Undeveloped growth Economy industrial structure . Liberalization of (mainly focused on industry the agricultural sector) . Efforts to secure . Establishment of . Diversification of . Liberalization of . Toward low- stable energy oil-oriented energy supply energy industry carbon energy supply for energy supply growth economic system Energy Energy development 10 Energy Industry Structure of Korea Promoting public companies and government-led development in the energy industry for a stable energy supply and active economic growth Supporting & controlling energy infrastructure with mid-to long-term plans Strengthening industrial competitiveness through liberalization of energy industry after the1990s - Oil industry was successfully liberalized and opened - However, liberalization process of power industry and gas industry is still in progress Public Private Oil Companies Government - Importers KOGAS - 4 Refiners • Overseas gas developer - Distributors • LNG Importer City Gas Companies • Wholesaler - Retailers KEPCO KDHC - Territorial Monopolies • Power generator • District Heat Supplier Coal Companies KNOC • Transmitter - Importers • Strategic Oil Stockpiling • Distributor - Producers • Overseas & domestic - Distributors oil developer 11 Other Institutions for Energy in Korea Institution Function Korea Energy Economics Energy Policy Planning and Institute (KEEI) Research Korea Energy Management Energy Audits & Implementation Corporation (KEMCO) of Conservation Programs Korea Institute for Energy Energy Technology Research Research (KIER) Energy Planning in Korea Established ‘Master Plan for National Energy’ as top national strategy regarding energy policy since 1997 ※ Master Plan for National Energy is the top energy plan which sets the basic direction and principle for mid- to long-term energy policy - There are detailed plans for major energy sectors under the Master Plan for National Energy Structure of Energy Master Plan Master Plan for National Energy Plan for technology development of national energy resources Strategy for climate change( Master Plan for reducing greenhouse gas] Demand Supply Plan for Plan for Plan for Plan for oversea Plan for power Plan for Long-term underwater Plan for Technology development rationalization resource supply natural gas Plan for mineral oil reserve and distribution of energy use development and demand Long-term supply coal industry resources of renewable energy All plans are mandated by laws. Responsible authority : Ministry of Knowledge Economy 13 Oil Industry Development in Korea The world’s 5th largest crude oil importer - Total crude oil imports : 927 million barrels (2011) The world’s 6th largest refinery capacity - Total refinery capacity : 2.78 million b/d (2011) Export of petroleum product recorded $52 billion in 2011 World Crude Oil Import Share Demand vs. Capacity Petroleum Product Exports [1,000 b/d] [billion USD] 51.8 3,000 50 Over Capacity USA 23% 2,500 China 11% 40 2,000 Japan 8% 30 India 7% 1,500 Other 42% Korea 5% 20 1,000 Germany 4% 500 10 * source : IEA/OECD (2012) ’70 ’75 ’85 ’93 ’95 ’97 ’99 ’01 ’03 ’05 ’11 ’90 ’93 ’95 ’97 ’99 ’01 ’03 ’05 ’07 ’11 14 Oil Industry Development in Korea • Fully Privatization : Entry, imports/export, and price linearization from 1997 • 4 Refiners: SK (1,115 bpsd), GS-Caltex (770 bpsd), Hyundai (390 bpsd), S-oil (580 bpsd) + Foreign participation: Caltex, Aramco (Saudi) (1,000 BPSD) Total Capacity: 0.64 (1980) → 2.855 million b/d (2010) ( % ) 3000 100 90 2500 80 70 2000 60 1500 50 40 1000 30 20 500 10 0 0 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2008 2009 2010 SK Energy LG-Caltex In-Chon Hyundai S-oil Co. Operation rate 15 Oil Pipeline System in Korea Source: Daehan Oil Pipeline Corporation, Homepage: www.DOPCO.co.kr Oil Stockpiling in Korea Nine stockpiling sites operated by the KNOC Total capacity: 127MMB of reserves ⇒141MMB by 2013 Duration day: 191 days (IEA standards (net daily imports) Source: Korea National Oil Corporation, Homepage: www.knoc.co.kr Coal Development in Korea Major Coal Fields in Korea . Production Promotion in past • Heavy subsidization for production increase in the 1970’s . Active Rationalization from the 1990’s • Low productivity • Significant demand decreases • No. of mines: 332 (1989) → 27 (1995) → 11 (2004) → 5 (2010) . Coal production decreased: • 19.8 million ton (1990) → 2.1 (2010) Natural Gas Industry in Korea LNG Terminals and Pipeline 4 LNG terminals and a nationwide pipeline networks for transport of natural gas . Storage : 6,320 th.㎘ (48 tanks) . Main Pipeline : 2,777 ㎞ . Regional Pipeline : 31,435 ㎞ Incheon Terminal [Bird’s-eye view of LNG terminal] Pyeongtaek (As of Dec. 2009) Terminal Storage Re-gas LNG Terminal Start Capacity Capacity (1,000 ㎘, #) (Ton/h) Incheon Oct. 1996 2,880 (20) 3,690 Tongyeong Pyeongtaek Nov. 1986 1,560 (14) 3,376 Terminal Tongyeong Sep. 2002 1,680 (12) 1,530 Gwangyang Terminal Gwangyang Jul. 2005 200 (2) 170 total 6,320 (48) 8,766 19 Natural Gas Industry in Korea Natural Gas Import The world’s 7th largest natural gas importing country Natural gas imported from 9 countries by ship (LNG) ※ Korea is the world’s largest LNG shipbuilder Oman Russia . 4.06mmtpa(’00~’24) .