Seoul to invest billions for energy resources

South Korea will spend 10 trillion won in the next decade to compete with China and India to secure oil and natural gas supplies as an expanding global economy lifts energy prices.

The government will budget about 1 trillion won, or $1.1 billion, each year to finance stake purchases by state-run and private companies in overseas projects, the Ministry of Commerce, Industry and Energy said Tuesday.
Stakes in energy assets should amount to 28 percent of South Korea’s oil and natural gas imports by 2016, it said, up from 3.2 percent in 2006.

South Korea, which imports 97 percent of its energy and resource needs and is the No. 5 buyer of crude oil, will step up diplomatic efforts and offer more “package deals,” like building power plants and roads to acquire oil and natural gas fields in areas like Central Asia, Africa and South America, the ministry said.

“Competition and prices for raw materials are forecast to continue rising because of rapid economic growth in emerging markets such as China and India,” Finance Minister Kwon Okyu said Monday. The government “will actively seek investment activities such as stake purchases in the development of overseas resources to secure stable supplies.”

Seoul also wants to attract private investors to pool about 500 billion won a year for energy exploration, while the state-run Export-Import Bank of Korea will increase financing for overseas projects, the ministry said. The government will spend 500 billion won over 10 years to develop technologies.

Companies like SK Energy and the state-run Korea National Oil plan to increase investments in overseas oil, natural gas and minerals projects by 81 percent to a record $3.8 billion this year, the ministry said in March.

“These efforts are not enough,” Kang Joo Myung, a professor at Seoul National University’s department of energy system engineering, said of the ministry plan Monday. “The government needs to be more aggressive.”

International Herald Tribune