[Editorial] Breakthrough Needed in Energy Diplomacy

China has announced a ban on coal exports until March because its domestic coal production cannot keep up with domestic demand. This has sent shockwaves throughout Korea’s electric power generation and cement industries.

Coal imports from China comprise 20 percent of Korea’s total, and coal reserves of the affected Korean industries will reportedly last for about a month. If prolonged, the coal shortage could close down factories in Korea.

China’s suspension of coal exports came after its recent heavy snowfall caused power shortages, yet it also reflects the worldwide energy shortage.

The world is engaged in a war for resources. Countries are fiercely competing not only to secure oil, natural gas and uranium, but also iron, coal and nickel. As China, India and Eastern Europe are sucking energy for industrialization, world energy demand has soared. With Korea importing 97 percent of its energy resources, a major disruption in securing enough energy in the world market could lead to disaster for the country.

The new world order is one in which real power lies with resource-rich countries, not money. After the collapse of communism, Russia was considered a Third World country. Using the world’s largest natural gas reserves and sixth-largest oil field as stepping-stones, however, Russia has come back as a powerful country.

Kazakhstan, which is known to have almost all of the chemical elements on the periodic table, has also seen its world status rise.

Chinese President Hu Jintao and Premier Wen Jiabao are conducting energy diplomacy, visiting oil-producing countries to buy oil fields with China’s abundant dollar reserves.

Given the importance of strengthening Korea’s energy diplomacy, it is worrisome that President-elect Lee Myung-bak’s special envoy to Russia did not meet Russian President Vladimir Putin during his visit. This is perhaps evidence that Seoul’s relations with Moscow are not problem-free.

While Korea is the world’s fourth-largest oil importer, the rate of its energy self-reliance development, or the amount of oil and gas developed and secured from home and abroad divided by domestic energy consumption, is merely four percent. This is far behind France (95 percent), Italy (51 percent), Spain (46 percent) and Japan (15 percent).

Oil and gas reserves secured by Korean energy developers are way below what other international energy giants have secured. Korea needs resource developers on a major scale.

It is good to hear that Korean National Oil Corp. and Samsung Corp. struck deals to buy oil fields with a combined 90 million barrels in the Gulf of Mexico and Congo. President-elect Lee’s government needs to support domestic investment in overseas resource development financially and diplomatically.