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Current Situation and Prospects of Energy Cooperation between

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					   Current Situation and Prospects of
Energy Cooperation between Two Koreas




                                    Kyung Sool Kim


            Korea Energy Economics Institute
            Center for Energy Research, Northeast Asia
Contents of Presentation


      Very Limited Interactions So Far

      Inter-Korean Energy Cooperation Projects

      Sectoral Agenda for Inter-Korean Energy
      Cooperation

      Difficulties and Polices
Very Limited Interactions So Far
 Oil Supply to Kumkang
  Mountain Tourism Area
     ~ 2004: 50b/d
     2005 ~ : 150b/d
     Gas Station and
      Auxiliary Facilities




 Asphalt Supply for Road and
  Airstrip Construction
     July 2005: Pitch 8,000ton
     Jan, 2006: Pitch 8,000ton
 Oil Supply for Railroad
  Interconnection
     2002. 10 ~ : 20b/d
     Storage Tank 3units,
       Lubricator 3units




 Humanitarian Aids for
  Ryong-Cheon Accident
  (2004)
     Asphalt 2,000ton
     Gasoline 167ton
     Diesel 167ton
                      Energy Supply to Gaesung Industrial District
 Demonstration District
  (15 firms)
     2004. 5 ~ : 220b/d
     Storage Tank:
       Light oil 400kl,
       LPG 30ton
     3 LPG Companies
     Electricity:
       15,000kW by
       Distribution
 Expansion of
  Electricity Network
     100,000kW by
      Construction of
      Transmission
      line(154kV)
     Under Construction
Energy Supply to Gaesung Industrial District

 KOGAS once
 examined natural
 gas supply to
 Gaesung ID
     Not fixed yet.
Major Inter-Korean Energy
Cooperation Projects

Significant Suggestion
Trilateral Electricity Cooperation
KORUS Proposal
Significant Suggestion
   ■   Transmit 2 million kW of electricity
         from Yangju substation in South to Pyungyang substation in North
         by way of the construction of transmission line
 Content
& Concept
Significant Suggestion                                                    Cost & Effects


      Cost Estimation

                           Construction of
                                                 Power Generation and
                            Transmission                                           Total
                                                    Transmission
                                Line
     AC                   1.5billion US$     3.9~8.1 billion US$               5.6 ~ 9.8
     Interconnection                         Generation cost: 50Won/kWh        billion US$
                          1.7 billion US$    Load Factor: 76%, Period: 6 ~
     HVDC
                                             10yrs



      Effects Estimation
                                 2003         S. Suggestion       2003 + S.S        Effects

     Capacity              7.77million kW    2 million kW       9.77million kW     1.257
     Power
                           19.6billion kWh   17.52billion kWh   37.12billion kWh   1.894
     Generation
     Electricity supply
                           870.3 kWh         777.9kWh           1,648.2kWh         1.894
     per capita
Significant Suggestion                                                                                                                                                  Effects


     Electricity demand/supply condition will be recovered more
     than 1990 level
        N. Korea recorded the highest power generation in 1990
        Current electricity supply problem will be totally solved
        Could be the turning point of national economic recovery
     100 million kWh
       450
       400
       350

       300
       250
       200
       150

       100
        50
         0
             1970
                    1975
                           1980
                                  1985
                                         1990
                                                1991
                                                       1992
                                                              1993
                                                                     1994
                                                                            1995
                                                                                   1996
                                                                                          1997
                                                                                                 1998
                                                                                                        1999
                                                                                                               2000
                                                                                                                      2001
                                                                                                                             2002
                                                                                                                                    2003
                                                                                                                                           2004
                                                                                                                                                  2005
                                                                                                                                                         2006
                                                                                                                                                                2007
                                                                                                                                                                       2008
                                                                                                                                                                              2009
                                                                                                                                                                                     2010
Trilateral Electricity Cooperation
                                          Russia, N. Korea, S. Korea


      Russian suggestion for the electricity supply from Bureya
        hydro power plant to South Korea pass through North Korea:
        Bureya Plant – Khabarovsk – Vladivostok – Kraskino –
        Chongjin – S. Korea
          1st Stage : Vladivostok - Chongjin
          2nd Stage : Chongjin – S. Korea


      Current status:
          Agreement on electricity network interconnection and electricity
           supply between DPRK and Russia (02.4)
          4th Three party meeting on Northeast Asia electricity network
           interconnection (05.2): Main argument is on the pre-feasibility
           study in DPR Korean area
          Comprehensive research project by KERI (03~05)
   Bureya HPP




CHINA           Khabarovsk




                Vladivostok
 DPRK
  Details of 1st stage

                                          500 kV
                                        Vladivostok
“Russia – DPRK Inter-connections”
                                        250km
                 AC 500 Kv, 50Hz          500 kV
      «Vladivostok-Kraskino-Chhonjin»    Kraskino
 Length ~ 380 km
 Transmission ~ 600 MVA                 130km
 1,500~2,500 million kWh/year
 Construction Costs: 160~180mln USD      Chhonjin
                                        300~500MW


       Source: ACE Engineering
KORUS Pipeline Proposal
     Proposed to import Russian (Sakhalin) natural gas to S.
      Korea by way of N. Korea
           Two different lines are suggested

     Suggested as
      an post-KEDO
      alternative

        Pipeline from
         Sakhalin to
         ROK by way
         of Khabarovsk
         , Vladivostok
         and N. Korea
Sectoral Agenda for Inter-Korean
      Energy Cooperation

   Non-Physical Capacity Building
   Energy market system
   Coal Sector
   Oil Sector
   Electricity Sector
   Gas Sector
   New & Renewable Energy Sector
   Other Sector
Energy Cooperation Agenda under Discussion


          Cooperation for Non-Physical Capacity Building
            Energy experts exchange
            Education/Training N. Korean energy experts
            Energy statistical system
            Energy census and/or Surveys

          Cooperation for the introduction of energy market
          system
            Education/Training on commercial energy system
            Education/Training on international energy market
            Reform energy laws and regulations
            Fostering private energy business firm
Energy Cooperation Agenda under Discussion


         Cooperation Agenda in Coal Sector
           Cooperation in coal mine modernization projects
             Cooperation in the development of new coal mine
             Coal technology exchange
             Cooperation in the development of foreign coal mine
             Cooperation in import of coal from abroad

         Cooperation Agenda in Oil Sector
           Supply heavy oil to North Korea
           Rehabilitation of idle refinery facilities
           Refine South crude oil in North refinery
           Cooperation in the construction of oil infrastructure
           Cooperation in physical distribution of oil
           Cooperation in the development of N. Korean oil resource
Energy Cooperation Agenda under Discussion


         Cooperation agenda in Electricity Sector
           Electricity supply to Gaesung Industrial District
             Significant Suggestion to supply 2 mil.kW to DPRK
             Cooperation for the interconnection of grids
             Cooperation in Northeast Asian grid interconnection
             Rehabilitation of power generation facilities in North
             Modernization of N. Korean transmission and
              distribution lines

         Cooperation Agenda in Gas Sector
           Natural gas Supply to Gaesung Industrial District
           Cooperation for the diffusion of LPG in North Korea
           Cooperation in the construction of gas infrastructure
           Cooperation in Northeast Asian gas pipeline project
Energy Cooperation Agenda under Discussion


         Cooperation agenda in NRSE (New & Renewable
         Sources of Energy) Sector
          Cooperation for N. Korean NRSE resources evaluation
          NRSE technology cooperation
          Cooperation in the development of demonstration
           projects

         Cooperation Agenda in Other Sector
          Cooperation in energy efficiency improvement projects
          Energy /environment improvement projects
Energy Cooperation between Two Koreas




              Difficulties

              Policies
Difficulties

      Different Perspectives on Inter-Korean Energy
       Cooperation


                       N. Korean Perspective       S. Korean Perspective

         Policy                                  Commercial energy
                     Self reliance
        principle                                system
                                                 Want to promote regime
        Regime       Very sensitive to regime
                                                 change

       Investment    Direct Assistance           Private Investment

       Approach      Take-off at single effort   Step by step approach

                     Minimize personal           Maximize personal
       Interaction
                     interaction                 interaction
Difficulties

       Different Restrictions of Energy Sector


            N. Korean Restriction              S. Korean Restriction

      Lack of energy policy capability   Unstable energy security

                                         Harmony of energy and
      Non-commercial energy system
                                         environment
                                         Investment for energy technology
      Rigid policy principle
                                         development

      Poor energy statistical system     Modernization of energy industry

      Linked energy issues with          High energy consuming
      external politics                  industrial structure

      Lack of capital and technology
Policies

      Principles and Policies

                Principles                            Policies

                                        Minimize free grant
      Principle of reciprocity
                                        Commercial investment
                                        Priorities in cooperation for
                                         people’s living
      Public consensus                  Parliament agreement for
                                         government's fund
                                        Respect N. Korean system
      Principle of integrated energy
                                        Intend to integrated energy
      system
                                         infrastructure in Korean peninsula
                                        Official talks and negotiation
                                        Create cooperative environment
      Government's role
                                        Tuning laws and regulations
                                        Suggest guide and directions
Preparation for the Future Cooperation

                   Research & develop various cooperative projects
                       Government, research institutes, private firms,
                        organizations
                       Wide spectrum of cooperation agenda
     Current
                   Almost all of them are not implacable owing to;
      Status
                       Closed characteristics of N. Korean society
                       Delay of system change to market mechanism
                       Undulation of South/North Korean relations
                       Lack of information on N. Korean energy sector

                   Blue print for inter-Korean energy cooperation
                       Government/private sector
                       Overall/sectoral
    Preparation
                   Expand contact and communication
   for the Future
                       Enhance energy policy capability
                       Build-up mutual trust and credibility
                       Guide to modern energy system
      THANK YOU VERY MUCH




      Korea Energy Economics Institute
CERNA (Center for Energy Research, Northeast Asia)

				
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posted:10/2/2012
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