The Russian Far East and
Northeast Asia:
Aspects of Energy Demand and Supply Cooperation
Victor D. Kalashnikov
An
Overview of Energy Demand and Supply for Northeast Asia
Northeast Asia
(NEA), which in this report covers China, Japan, South Korea, North
Korea and the Russian Far East, is one of Asia's most dynamic sub
regions. With the exceptions of North Korea and the Russian Far East,
the region has demonstrated spectacular economic growth at various
times for over four decades. As a consequence, the region's economic
growth was accompanied by explosive growth in energy demand despite
energy consumption's low GDP elasticity.
NEA's economic development over the past 15
years has been accompanied by a constant increase in the region's share
of global energy consumption. In 1985, NEA's share of global energy
consumption slightly exceeded 14%; in 1997 it almost reached 20%.
Global and
Northeast Asian energy supplies are heavily dependent on commercial
non-renewable fossil energy sources (hard and brown coal, crude oil,
condensate, natural and liquefied natural gas). Fossil fuel consumption
continues to increase despite periodic oil price shocks, government
energy efficiency policies, and debate on the environmental problems
associated with carbon/nitrogen/sulfur/solid waste-related fuel
combustion.
Table 1 shows commercial energy consumption
figures for NEA and the rest of the world. In the figures for global
energy sources, oil remains prominent at nearly 40 percent - down more
than 5 percent from its 1970 share while natural gas' share rose from
18 percent in 1970 to more than 23% in 1997.
Table 1.
Energy Consumption in Northeast Asia and the World, 1997* (Unit:
million tonnes of oil)
* 1997
figures from BP World Energy Statistics, 1998, (except for North Korea
and the RFE). 1996 North Korea figures from D. Von Hippel, and P.
Hayes, 1997. Demand for and Supply of Electricity and other Fuels in
the DPRK: Results and Ramifications for 1990 through 2005. Nautilus
Institute for Security and Sustainable Development, Berkley,
California, USA. 1997 RFE figures from Khabarovsk Economic Research
Institute (ERI).
** including biomass and charcoal.
Coal, with a 27
percent share, remained the second-largest energy source. Nuclear power
rose spectacularly from 0.4 percent in 1970 to 7.3 percent in 1997,
combining with hydro to account for 10 percent of global energy
consumption.
The NEA region, in contrast, has been heavily
dependent on coal for many years. At present, coal accounts for nearly
51.5 percent of the region's total energy consumption, followed by oil
at 34.5 percent and natural gas and LNG at only 5.5 percent, while
nuclear power and hydroelectricity constitute 6.5 percent and 1.5
percent respectively. It should be noted that the high percent of coal
use in Northeast Asia is due to China, which accounts for 55 percent of
the region's energy consumption and 80 percent of the region's coal use.
Within Northeast
Asia, each country's energy demand and supply situation is unique. Oil
accounts for more than half the total commercial energy consumption in
Japan and South Korea. Oil and natural gas*1
resources exceed 65 percent of
total energy consumption in Japan and South Korea. However, both
countries have a near total dependence on imported fossil fuel energy
(Table 2). North Korea produces and consumes a relatively large percent
of coal, and also a sizable portion of non-commercial fuels such as
biomass and charcoal, but the country is completely dependent on
imported oil. The country also needs to import a certain amount of coal
for its steel industry. North Korea is the only country in the region
which does not use natural gas at all.
There are substantial differences between the
amounts and patterns of energy consumption among the Northeast Asian
countries. Picture 1 shows that the region's members' energy
consumption levels vary substantially. The countries with relatively
high levels of per capita energy consumption, in contrast, have low GDP
energy intensity parameters.
The amount of
energy reserves each country possesses differs strongly. As shown in
Table 3, North Korea, and especially Japan and South Korea, lack
primary fuel reserves, having only substantial confirmed coal reserves.
In fact, no substantial oil and natural gas reserves have been
discovered in these countries. If the Russian Far East is not taken
into account, China is the only energy resource-rich country in the
region. China is the region's only country that has a relatively
balanced energy consumption/production structure, although its energy
consumption is heavily dependent on coal. Since 1993, China has been a
net oil importer, and experts predict that the country will soon join
the ranks of Japan and South Korea as one of Northeast Asia's major oil
importers.
Table 2.
Actual Imports (+) and Exports (-) of Energy by NE Asian Countries in
1995 (Unit: Million Tonnes of Oil)
* Estimates for 1996.
Source: North Korea figures from D. Von Hippel,
and P. Hayes, 1997. Demand for and Supply of Electricity and other
Fuels in the DPRK: Results and Ramifications for 1990 through 2005.
Nautilus Institute for Security and Sustainable Development, Berkley,
California, USA. Other figures from K. Fujime, "The Long-Term Energy
Outlook for Northeast Asia" in Russia's Eastern Energy Policy and
Integration Problems in the Energy Sector of the Asia-Pacific Region.
Conference Proceedings, Irkutsk, Russia, 1998.
Table 3.
Confirmed Energy Reserves in Northeast Asia (For the end of 1997)
* Data
for the end of 1994.
Source: BP Statistical Review of World
Energy; ERI.
Table 4 provides an overview of projected
scenarios for future energy use among several different countries. For
each prediction, the table shows the average annual growth rate of
commercial energy consumption from the early 1990s (base years vary
among the groups) projected until 2010.
The results of
various national and international scenarios for regional energy
development vary somewhat, however, the overall pattern of stable
growth in energy use is uniform. The region's predicted energy
consumption growth rates are lower when compared to actual rates from
the past period.
Table
4. Projections for Commercial Energy Consumption in Northeast Asian
Countries (Annual average growth rates from early 1990s projected until
2010, %)
Source
of Projection
China
Japan
South Korea
North Korea
Institute
of Energy Economics, Japan
East-West Center, USA
RAINS-Asia
3.5
3.6
4.5
1.8
1.7
1.8
3.4
3.4
5.0
5.3
Source: P. Hayes,
and D. Von Hippel. 1997. "Regional Approaches for the Cooperative
Development of a Clean, Efficient Electric Power System" in Regional
Economic Cooperation in Northeast Asia. Proceedings of the Seventh
Meeting of the Northeast Asia Economic Forum. Edited by Mark J.
Valencia. Hawaii Asia-Pacific Institute. K. Fujime, 1998. "The Long-
Term Energy Outlook for Northeast Asia" in Russia's Eastern Energy
Policy and Integration Problems in the Energy Sector of the
Asia-Pacific Region. Conference Proceedings, Irkutsk, Russia, 1998. F.
Fesharaki, S. Banazak, and Wu Kang. 1998. "The Outlook for Energy
Supply and Demand in Northeast Asia" in Energy and Security in
Northeast Asia: Supply and Demand; Conflict and Cooperation. Policy
Paper # 36, February 1998. IGCC. University of California.
It is obvious that
each country's energy policy and energy demand-supply outlook is
influenced by a variety of factors and national priorities. In NEA
countries as a whole, most energy consumption will continue to be
derived from fossil fuels. In structural terms, the leading NEA energy
consumers (Japan, China and South Korea) intend to diversify their
energy sources, although coal and oil will remain their primary energy
sources. According to a forecast by the Institute of Energy Economics
of Japan (IEEJ), these countries share a similar policy of increasing
their atomic energy*2
use (Table 5). For example, in Japan,
the IEEJ predicts the amount of energy supplied by nuclear energy will
increase from 15.5 percent in 1995 to 19 percent in 2010; in South
Korea, from 12 percent to 17.5 percent, respectively for the same
period. Within these countries, however, increased reliance on nuclear
power faces obstacles over the issue of appropriate locations for
nuclear reactors and opposition among the general public.
Table
5. Energy Supply Projections in Key Northeast Asian Countries (Energy
supplies and annual average growth rates from 1995 through 2010, %)
Coal
Oil
Natural Gas
Hydro
Nuclear
Total
China 1995 2010 AAGR
75.5
65.6
18.9
24.0
1.8
3.9
2.0
2.7
0.4
2.3
100
100
2.6
5.2
8.9
5.7
16.1
3.5
Japan
1995
2010 AAGR
17
17.5
53.9
44.8
10.6
14.7
1.5
1.7
15.4
19.0
100
100
2.0
0.5
4.0
2.9
3.2
1.8
South Korea 1995 2010 AAGR
20.2
21.5
61.8
49.2
5.7
11.5
0.3
0.2
11.9
17.6
100
100
3.8
1.8
8.4
-1.4
6.1
3.4
Source:
IEEJ.
According
to estimates by a number of national and international research groups,
in the 21
st
century NEA energy consumption patterns will
be affected by an increase in natural gas use. As noted by Fesharaki,
Banzak, and Wu Kang*3
, Fujime*4
, Hirata*5
, Sui Shuo Bao*6
, natural gas will account for a
larger share of the region's energy consumption. According to their
estimates, between 1995 and 2010, natural gas consumption will increase
as follows:
in China - by 705%
in South Korea - by 330-360%
in Japan - by
180-215%.
For the entire NEA region (taking into account
the Russian Far East) natural gas consumption will rise spectacularly,
with usage doubling in 2010 to more than 250 billion m
3
(compared to 104 billion m
3
in 1997).
Another key aspect of the region's projected
growth in energy use is the shift in energy import patterns. The key
NEA countries' dependence on energy imports will persist in the future
and even grow (Table 6). Despite the increase in the use of atomic and
hydro energy in the region, as well as increases in the production of
coal, oil and natural gas in China, the "total energy
production/consumption" balance in Japan, South Korea and China is
predicted to be negative. Of particular concern is China's projected
shift over the first decade of the 21
st
century from being a fairly small net
importer of oil in 1995-1997 to being a rather large net importer,
second only to Japan. Also, Chinese experts predict that China's
natural gas imports will rise to South Korean levels in 2010.
Table 6. Import (+)
and Export (-) Projections of Primary Energy by Key NE Asian Countries
in 2010
Source: K. Fujime, 1998. Institute of Energy
Economics of Japan. "Long term Energy Outlook for Northeast Asia. In:
Eastern Energy Policy of Russia and Problems of Integration into the
Energy Space of the Asia-Pacific Region." Proceedings of Conference.
Irkutsk, Russia. M. Hirata, 1998. Asian Pipeline Research Society of
Japan. Prospects of Natural Gas Demand in Asia Based on Advanced Power
Generation Technologies to Reduce CO2 Emissions. In: Eastern Energy
Policy of Russia and Problems of Integration into the Energy Space of
the Asia-Pacific Region. Proceedings of Conference. Irkutsk, Russia.
Sui Shuo Bao, 1998. National Petroleum Company of China. Perspective
Plan of the Chinese Gas Industry Development. In: Eastern Energy Policy
of Russia and Problems of Integration into the Energy Space of the
Asia-Pacific Region. Proceedings of Conference. Irkutsk, Russia
.
Next
