Monday, March 29, 2010
This file photo shows a natural gas production platform in offshore Vietnam partly operated by Korea National Oil Corporation. [KNOC]
Korea's self-sufficiency in energy supply sharply increased last year thanks to active acquisition of oil and natural gas fields overseas, the government said yesterday.
The Ministry of Knowledge Economy said that the rate in oil and gas increased to 9 percent of local demand from 5.7 percent in 2008 as Korea spent $5.18 billion - a 32 percent increase - on energy exploration projects and acquisition of energy assets last year.
However, Korea must be more active in acquiring oil and gas fields as competition for energy security has heated up among major players with deep pockets, experts said.
The growing demand for energy along with the recovery of the global economy is pressuring countries to enhance their energy security, they added.
Compared with other global major energy firms, Korea's investment in oil and gas exploration overseas - plus the capital size of its state-run oil developer - is still small, an energy expert in Seoul said.
"It is a money game, favorable to those who can pay much more than others. So China, which holds an estimated $2 trillion in foreign reserves is undoubtedly at the fore," said Choi I-tae, manager of the planning and international cooperation team, at the Energy & Mineral Resources Development Association of Korea.
PetroChina Co., a state-run oil developer, said it will spend at least $60 billion in the next decade on overseas acquisitions in a recent interview with Bloomberg.
PetroChina, also known as Sinopec, is the world's largest company in the field by market value, while KNOC is ranked 50th, Choi said.
Korea is likely to acquire two or three oil and gas fields this year with an $8.7 billion budget, said Park Soon-kee, director of the resource development policy division at the Ministry of Knowledge Economy. The government hopes to increase self-sufficiency in oil and gas to 18.1 percent by 2012.
"The number of oil and gas fields listed in the market has increased from before the Lehman crisis," he said.
Energy demand growing
Experts say the world will see a significant increase in energy prices with demand growing this year.
"Oil prices have been rising since late last year with signs of economic recovery appearing around the world," said Hana Daetoo Investment analyst Chung Min-kyu in a recent report.
The market price of Western Texas Intermediate surged to $80 per barrel in December last year from $30 per barrel in early 2009.
Investors are also pouring funds into the commodity market as the value of the U.S. dollar drops and they try to find a stable source of investment. Oil and gas fields, in this respect, are likely to gain value.
"This is why Korea has to step up its effort in securing energy overseas and invest in a long-term perspective. If we lose in the energy competition now, China and other major firms will dominate the market scene, offering us no chances to secure more energy sources in the future," Choi said.
As major energy firms based in Europe and North America have already dominated major oil and gas fields around the world in the past years, China, Japan and Korea are looking for new markets in Africa, Middle East and South America that still have higher political risks.
"Korea can think of seeking cooperation with Japan, to deal with giant energy firms funded by the Chinese government," he said.
(christory@heraldm.com)
By Cho Chung-un
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