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| Title | [Speech] Energy Security and the World Economy | 2005.11.21 |
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FROM: Delivered by Mr. David Younghoon Kim Chairman & CEO, Daesung Group Vice Chairman, World Energy Council November 17, 2005 Subject: Energy Security and the World Economy Good afternoon, friends, my fellow esteemed panelists and distinguished guests. The aftermath of Hurricanes Katrina and Rita gave us a vivid picture of how fragile our world can be and how the world economy is hopelessly interlinked to energy which is the life-blood of all industrial endeavors. The natural forces could, in a split moment, have destroyed one third of the US refinery facilities which would have resulted in reduction of one third of oil production. Thereby, it threw the world energy balance into a tailspin and spiked oil prices up by over 10%. The heavy toil extracted on all oil importing countries cannot be over-emphasized and higher oil prices have put further pressure on a world economy that is already reeling under various shocks. Some economists calculated that oil price increase of U$10/barrel can reduce world GDP growth rate by 0.3-0.5%. In fact, however, the world is not running out of energy. (disparity : Bad news traveled faster than good news.) My premise is made on the basis that according to the BP Statistical Review of World Energy, as of the end of year 2004, world oil proven reserves have reached a record 1,148 billion barrels, sufficient to support 41 years of current world production of 80 million barrels per day. For gas it has reached a record 179.5 trillion cubic meters, good for 67 years of current world production of gas. This encouraging scenario was underscored by the past 30 years of successful deep water exploration and by new technologies in exploration and production which added more oil reserves than were produced. With continued technological advances in exploration and production , this trend is likely to continue over the next 10 years more. On the other hand, we must not ignore the fact that since the first oil crisis in 1973, some experts have forecasted "drying-up" of oil reserves by the turn of 21st century with energy consumption far outpacing new discoveries. This forecast proved to be wrong. However, we cannot easily dismiss alarmist and pessimistic views which argue that the price of oil can go beyond U$100 due to the intrusion of hedge funds into energy market, and rapid increase of energy consumption on the part of so called BRICs countries, i.e., Brazil, Russia, India and China. Today, I would like to focus on China not only because of sheer size and influence of its huge economy, but all the more because its dependence on foreign energy resources has been dramatically increasing. In the interest of time allocated for me, I will touch on the issues of other economies briefly later if time permits. (If China is OK, everything is OK at the moment.) China imported net 3.3 million barrels/day of crude oil and petroleum products in 2004 which accounted for almost half of total demand. Given the lack of major oil discoveries and declining domestic production coupled with robust 10% increase in annual energy requirements, China is forecasted to increase oil import levels annually by 20-25% over the next 5-10 years. Besides, China proclaimed strategy of reducing reliance on coal for environmental reason. One of the other major issues faced by China is that over 60% of oil imports comes from the unstable Middle East countries. To improve her supply security, China has come up with a policy to build strategic storage and increase refining inventory to support 30 days of import. So far, China through its 3 major petroleum companies: CNOOC, Sinopec and PetroChina, have taken an aggressive acquisition posture not only by securing long term LNG |
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| NO | Title | Date |
|---|---|---|
| 32 | Daesung Group, Advances into Chines... | 2005.12.21 |
| 31 | [Speech] Energy Security and the Wo... | 2005.11.21 |
| 30 | [Speech] Introductory Speech of Pri... | 2005.11.20 |
| 29 | [Speech] Welcome Remarks by Mr. Dav... | 2005.11.20 |
| 28 | APEC Business Advisory Council, Ann... | 2005.11.10 |
