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Energy Crisis in DPR Korea and Energy Crisis in DPR Korea and Cooperation IssuesCooperation Issues

DPRK Energy Expert Study Group Meeting

Stanford University, Palo Alto, California, USAJune 26 – 27, 2006

Ji-Chul Ryu, Ph.D.Korea Energy Economics Institute

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Energy Crisis in DPR Korea

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Energy Crisis in DPR Korea Total Primary Energy Supply (unit: million TOE)

0

5

10

15

20

25

1980 1985 1990 1995 2000 2003

Others

Nuclear

Hydro

Oil

Coal

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Energy Crisis in DPR Korea • Total primary energy supply

3.5 % pa since 1990– 16.1 million TOE (Ton of oil equivalent) in 2003 = 66 % of 1990

level (less than 1/13 of total energy supply in Korea)

• The downturn of the energy sector in the country is a combined result of – Significant cut of subsidized oil supply from the Former Soviet

Union and China since the late 1980's– Failure to maintain and modernize energy infrastructure,– Impacts of natural disasters, and– Inefficient energy production

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Energy Crisis in DPR Korea Closed economic system: Self-reliance policy (Juche ideology)

– Domestic energy sources: Anthracite coal, hydro

– Coal: 72%, Hydro: 16% , NRE: 5%, Oil: 7 %

• Linked energy issues with external politics– Oil supply: Political friendship with China and FSU

– Electricity: KEDO 2 Light Water Reactor (LWR)

Energy Poverty + Collapse of Industry – Non-existence of commercial energy markets financing problem

– Serious shortage of fuels for people and industry

– Deforestations flooding

Fuel wood use in DPR Korea

땔감채취 주민 ( 금강산 온정리)

Deforestation and Land Slide

Gaesung area

Transport Energy in Gaesung, DPR Korea

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Energy Indicators in Two Koreas

1990 2003

Unit DPRKKoreaDPRK Korea

Total Energy MMTOE24.0 93.216.1 215.1

per capita TOE1.2 2.20.7 4.5

Generation capacity GW7.14 21.027.77 56.05

Generation TWh27.7 107.719.6 347.3

Refinery capacity 천 bbl/d70 84070 2,438

Oil imports MMbbl18.5 308.44.2 804.8

Coal production million ton33.2 17.221.9 3.3Source: Korea Energy Economics Institute, 2004

National Statistics Administration, 2004, Republic of Korea

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Energy Policy of DPR KoreaPolicy ideologySectorPolicy MeasuresSelf-Reliance ProductionHydro development

Coal developmentOil investigation

ConsumptionMaximum use of coal & hydroLimited use of imported energyExtended use of renewable energyEnergy conservation

TechnologyTechnology development fordomestic resources utilization

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Recommendation for DPR Korea1. Abandoning its long-pursued self-reliance economic policy

• opening the energy system to commercial energy supply from overseas

2. Establishing market mechanism for energy and creating energy market

• introducing energy pricing and tax systems and reforming energy legal structures

3. Promoting active regional/international cooperation • rehabilitation of the existing energy facilities• expansion of energy system + accommodating foreign investments.

4. Adopting cost-effective energy options in recovering energy system• increasing role of petroleum in energy mix in parallel of pursuing new and

renewable energy in the short term• natural gas with the medium-long term goals.

5. Strengthening energy policy making capability• improving energy statistics and modeling infrastructure• training energy experts and scientists.

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Creation of Environment for Energy Cooperation with DPR Korea

1. Accept demand from the international community for security concerns transparently• dismantling nuclear weapon programs• de-coupling the energy issues from the politics

2. Access to the membership of the IFO • International Monetary Fund (IMF), other international financing

organizations (WB, ADB), and multilateral energy cooperation bodies

3. Closely consult with Korea and other developed countries in reconstructing the energy system• energy systems of both Koreas can be integrated into mutually

compatible single system in future.

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Energy Cooperation Agenda with DPR Korea1. Providing with training/education programs for energy planning/ impl

ementation

2. Humanitarian aids for supply of energy products for civilian use • anthracites coal, LPG, kerosene, diesel• heavy fuel oil and coal for power generation

3. Power supply to a limited area (eg, Gaesung, Pyeongyang)4. Renovation/re-construction of existing energy production facilities:

• coal mines, refineries, power plants, transmission/distribution systems• technical, financial and experts assistances

5. Power interconnection with Korea and Russia Far East6. Natural gas pipeline project: Sakhalin and Irkutsk projects

7. Resuming the construction of two LWRs of the KEDO ?

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Energy Projects in Implementation with DPR KoreaEnergy Projects in Implementation with DPR Korea

• Power Supply to Gaesung from Korea– 15,000 kW to South Korean factories from March 2005

• NGOs’ Briquette Aids to Civilians Kumgang Mt. area– cooking and heating

• Training/education program– UN DESA, EU programs

• Inter-governmental meeting for regional energy cooperation in Northeast Asia

– UN/ESCAP, Korean government initiatives + SOC meetings

NGOs’ Briquette Aids to DPR Korea

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Energy Projects in Discussion with DPR KoreaEnergy Projects in Discussion with DPR Korea

• Proposal of Power Supply of 2 GW by Korean government– to replace the KEDO’s two LWRs

• Power Interconnection with Russia– Russia’s supply of power to DPR Korea

– Size: 500 MW, Distance: 380 km, Capital: US$ 180 million

• Natural gas pipeline projects from Russia– Multilateral cross-border projects with the long term goals

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500 kV Network500 kV Network

Bureya HPP

CHINA

DPRKVladivostok

Khabarovsk

Russia-DPR Korea Power Interconnection

(Source: Kap-Goo Yoon, 2004)

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동북아 천연가스 개발 협력동북아 천연가스 개발 협력

(Source: TNK-BP, 2005)

China, Korea,

Taiwan -LNG

Japan -LNG

USA -LNG

Integrated Option: Sakhalin and East Siberia

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Thank you very muchGamsa’hamnida

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