SPEAKING
FREELY South Korea enters the Great
Game By David Nguyen
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
On May 5, Kazakh
government officials confirmed receiving three
Kilurki-class (Sea Dolphin) patrol boats donated
by South Korea. The boats were received at a
handover ceremony in Turkey and will likely become
a part of the Kazakh navy's Caspian flotilla.
The recent completion of the
Baku-Tbilisi-Ceyhan (BTC) pipeline reflects
growing international interest in securing access
to the large natural-gas reserves around the
Caspian Sea, primarily those in Azerbaijan and
Kazakhstan. As regional neighbors such as China
and Japan frantically search for new sources of
energy, so does South Korea, which imports 97% of
its energy
needs, according to the World
Nuclear Association brief.
South Korea's
gross domestic product (GDP) is expected to grow
at 6% this year, which, though a less torrid pace
than in previous decades, still leads to rapidly
growing energy demand to sustain the economy.
Since the late 1970s, electric consumption has
increased a hundredfold, from 36 terawatt-hours
(TW-h) in 1978 to 365 TW-h in 2005. (The
terawatt-hour is a very large unit of electrical
energy, equal to 1 billion kilowatt-hours.) Oil
consumption has quadrupled since 1980, while
natural-gas consumption, non-existent three
decades ago, has skyrocketed to 900 billion cubic
feet per annum.
Adding to domestic energy
demands, South Korea has offered to supply energy
to North Korea should the North abandon its
nuclear arsenal.
To satisfy the rising
energy demands from its economy, South Korea has
developed a very active civilian nuclear program,
which calls for the construction of eight new
nuclear power plants between 2000 and 2015.
Virtually all petroleum needs are met
through imports, primarily from Saudi Arabia and
the United Arab Emirates, both of which are
expected to reach peak oil production within the
next decade. To diversify its energy sources away
from growing instability in the Middle East, Korea
has begun aggressively courting emerging energy
markets in Russia and the Caspian Sea states,
primarily Azerbaijan and Kazakhstan.
While
China has entered into joint development contracts
in Canada and Iran, and Japan has secured the
construction of Russian pipelines, South Korea has
not been very prominent as a global energy player.
Despite being a large economy in its own right,
Korea does not wield the same political influence
when acquiring energy contracts as its neighbors
do. Russia has primarily courted China and Japan
when seeking investments on developing Siberian
energy deposits.
Elsewhere, energy deals
between countries such as Iran and China, or Saudi
Arabia and the US, are on a much grander scale, as
China and the US provide both a large consumer
base and the ability to provide security needs
through military hardware and/or their influence
in the United Nations Security Council.
Despite such setbacks and disadvantages,
South Korea continues to expand its ties with the
Caspian nations, and may well have little choice
but to do so if it is to maintain energy security.
Korea has been quick to become a participant in
the BTC pipeline, which now allows the landlocked
Central Asian nations to export their oil to
Turkish ports instead of relying on pipelines
traversing through China and Russia, and avoiding
routes through Iran altogether.
On May 4,
President Roh Moo-hyun visited Azerbaijan seeking
to improve bilateral economic cooperation, with
intentions of acquiring a stake in the development
of Azerbaijan's petroleum and natural-gas reserves
by Korean companies.
Across the Caspian
Sea, South Korea has long had ties with
Kazakhstan, partially stemming from the large
population of ethnic Koreans in that country. In
2004, Kazakhstan and South Korea signed a
memorandum of understanding to develop Kazakh
uranium mines jointly in Budennovsk, which will
help Korea to increase its nuclear-energy
production.
In the petroleum sector, South
Korea has expressed interest in the joint
development of oilfields in western Kazakhstan,
but has so far been unable to achieve the same
success as Chinese or US firms operating in that
country. Despite such setbacks, it is clear that
Korea will continue to expand its economic
interests in Kazakhstan by offering further
investments and military hardware.
Ultimately, South Korea may need to
consider riskier investments that have not caught
the interest of other nations. The vast Sakha
Republic in Siberia, a constituent in the Russian
Federation and home to a plethora of resources,
has yet to see large-scale development of its oil
and gas fields. Much of the reluctance to invest
in Sakha is due to the climatic conditions and
lack of infrastructure required to export these
resources. Another risky proposal was the
construction of a Russian pipeline to South Korea,
which would require crossing into North Korean
territory.
Overcoming these obstacles
would require significant investment and risk,
driving potential investors to look for more
appealing locations. With peak oil production
expected to hit Middle Eastern supplies, as well
as competition from larger, more influential
nations, South Korea will need to diversify its
energy sources by investing in risky energy
ventures while aggressively securing more
development rights in the emerging energy markets
around the Caspian Sea.
David
Nguyen is a University of Hawaii alumnus with
a degree in political science and Asian
studies.
Speaking Freely is an
Asia Times Online feature that allows guest
writers to have their say. Please click hereif you are interested in
contributing.
