Why overseas energy exploration must continue
Citizens are growing more interested and furious over the three corruption scandals involving the four-rivers restoration project, the resources development project and the defense industry. The corruptions that encroach on the state finance and undermine defense capability must be eradicated.
As the world has experienced a number of high oil price eras since the 1970s, countries are fiercely competing to secure a stable source of energy. Countries in a similar situation as Korea in terms of energy resources have established a state energy corporation and made them globally competitive companies, such as Total of France, Repsol of Spain and ENI of Italy. Having accomplished a rapid growth lately, China is making enormous investment in public energy company, CNPC, aggressively securing overseas mining claims and oil fields developers. Japan has made a major investment in overseas energy resources development through private companies.
As the global economic slump and shale gas revolution resulted in a weakening of the energy resources development market, related industries in China and Japan are struggling with astronomical losses. While they are in a far more serious situation than Korea, they understand the risk of the energy resources development business and embrace the loss from the failure as a price of learning a lesson for the next investment.
The Myung-bak administration had aggressively participated in the overheated energy resources market, and some of the projects are now considered failures. An energy resource development project’s cycle is about 30 years, and evaluating a project based on the outcome of the first five years may reveal lack of understanding regarding the project’s nature. We need to calmly review the gains and losses of the energy development project for the last five years and prepare a plan to enhance the success rate based on the trial and errors and failures until now.
The advent of the shale gas revolution is changing the industrial structure of the world. At this juncture, I wonder if a witch hunt on the overall energy resources development project based on procedural failures would help the country that imports 97 percent of its energy resources in the long run.
*Kang Joo-myung Professor of energy systems engineering at the Seoul National University