Korea Paints `Hollow’ Picture for Energy Development Abroad

South Korea unveiled an ambitious plan last week to raise the “self-sufficiency’’ level in oil and gas development from the current 3 percent to 28 percent in the coming decade by increasing production of its state-run and private companies abroad.

Without concrete details, however, the government is criticized for only drawing a “hollow’’ picture amid the intensifying energy war around the world in the 21st century, according to experts.
Some critics point out that the government’s optimistic approach, largely based on “unrealistic’’ estimates, is only aggravating public distrust in the country’s energy development projects abroad.

In the era of globalization characterized by unlimited competition across the border, the world is engaged in a war _ the “energy war.’’ As of 2005, China had invested $17.7 billion; Japan $6.4 billion; and India $1.5 billion in their overseas oil development projects.

On the contrary, South Korea, which relies some 97 percent of its energy demand on imports from other countries, has spent only $950 million on oil exploration and development activities.

Last week, the Ministry of Commerce, Industry and Energy (MOCIE) said the country would invest some 10 trillion won ($10.7 billion won) to raise its self-sufficiency level in oil and gas to 28 percent by 2016.

A country’s self-sufficiency rate in development of energy resources is calculated by dividing the total amount of natural resources developed by state-run and private firms of the country in a certain year by the amount of domestic consumption.

South Korea’s self-sufficiency rate stood at 3.2 percent in 2006. While about 34 million barrels of oil and gas were produced by local companies around the world, some 1.09 billion barrels were imported from abroad in that year.

Critics and industry sources, however, call the government plan “too rosy’’ since it depends largely on the ongoing exploration activities whose success rate stands at around 5 percent.

South Korean firms are currently engaged in a total of 96 oil projects abroad and 56 of them, or about 58 percent, are in the exploratory stage, though government officials claimed they have already taken such situations into account.

“It is nonsense if the government included the `imaginary’ oil in fields whose reserves have not even been evaluated yet, in the future production estimates,’’ a private company official said on condition of anonymity.

Korea Times