South Korea
said Wednesday that it aims to more than
triple its energy self-sufficiency by 2019 by developing and investing more in
overseas projects to meet the growing needs of Asia's
fourth-largest economy.
The country will raise its self-sufficiency ratio for petroleum and gas so that
30% of the total oil and gas imports in 2019 come from its own assets overseas,
compared with 9% last year, the Ministry of Knowledge Economy said in a
statement on its long-term overseas energy development plan.
"Prices of oil, gas and minerals are all set to rise in the coming years
due to imbalances in supply and demand. Demand from emerging market economies,
in particular, is rising with the recovery of the global economy."
The government will push to enlarge Korea National Oil Corp. and other state-run
energy companies, seek to buy promising assets and further develop overseas
production facilities to enhance the country's energy self-sufficiency, it
added.
Imports account for most of South
Korea's energy needs, but the country has
been aggressive in acquiring assets overseas and in the exploration and
development of crude and natural gas fields it has already acquired.
In its search overseas, South
Korea is pitted against some formidable
Asian competitors, which may result in it having to pay top dollar for prize
assets.
Rising economic powerhouses China
and India
have long encouraged their state and private companies to look overseas to cut
heavy reliance on imports.
China,
in particular, has scored well, through a combination of government-backed
incentives and loans for target countries, enormous financial reserves and
improving skills in negotiating sometimes highly complex and competitive deals.
So far, South Korea has
focused on smaller- or mid-sized investments, while China, in contrast, has racked up a
string of oil and gas deals this year in the $3 billion-plus range.
"The regional competition to ensure energy security is getting
tougher," said Lee Jung-hun, an analyst at Hana Daetoo Securities. "South Korea faces stronger rivals such as China and India. It all boils down to how to
fund M&As and development projects. In that sense, Korea is still
an underdog."
He said the government's target of 30% for its energy self-sufficiency ratio by
2019 was "very aggressive," given that its current ratio for crude
stands at a mere 4%.
The country aims to increase crude output from its overseas fields to 699,000
barrels a day in 2019 from 136,000 barrels last year, while raising natural gas
production to 39,000 metric tons from 14,600 tons under the long-term plan.
South Korea is the world's
second-largest liquefied natural gas importer after Japan.
The country will also increase its self-sufficiency ratio for six strategic
minerals including uranium, nickel and iron ore to 42% of total imports in 2019
from 25% last year, while raising the ratio for rare earths and lithium to 26%
from 7.3%, the ministry said.
The ministry also said the government will increase its energy budget and
extend more financial assistance and tax benefits to companies exploring
overseas resource development projects.
South Korea
plans to raise energy-related government guarantees and loans via Korea Trade
Insurance Corp. and Export-Import Bank Of Korea to KRW8.5 trillion in 2013 from
KRW5.12 trillion this year.
The ministry also said that Korea's
pension fund, the National Pension Service, will actively invest in overseas
energy development projects in the coming years.
State-run KNOC said last week it plans to spend $2 billion-$3 billion to
increase its crude oil and natural gas production capacity to 300,000 barrels
of oil equivalent a day by 2012, from 200,000 barrels now, through asset
purchases and exploration of existing overseas oil and gas assets.
As part of these efforts, one of KNOC's overseas units last week acquired the
Canadian assets of Hunt Oil Co. for C$525 million. It followed KNOC's GBP1.87
billion hostile takeover of U.K.
oil and gas company Dana Petroleum PLC (DNX.LN) in September.