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The news that China is about to buy all the natural gas from Burma¡¯s offshore wells clearly shows how helpless Korea is against Asia¡¯s super-power. Energy experts have criticized the government for failing to take necessary measures and instead bragging about its dubious energy achievement. In a nutshell, Korea has failed in its energy diplomacy.
¡ß Caught Off Guard
A Korean delegation of 20 officials led by a Commerce, Industry and Energy director flew to Burma last month as a rumor circulated that Korea would be excluded from Burma¡¯s sale of natural gas. While the Burmese government showed little interest in the Korean delegation, a Chinese delegation led by Chinese State Councilor Tang Jiaxuan that arrived in Burma the same day met with a series of high-ranking Burmese officials.
¡°Rich in natural resources with the world¡¯s 10th-largest natural gas deposits and oil deposits of 3.2 billion barrels, Burma is a strategic transportation point for China that can replace the Strait of Malacca, where over 80 percent of China¡¯s energy imports go through,¡± an expert on China said. ¡°China¡¯s decision to develop a port there and build oil and gas pipelines linking China and western Burma has to be understood in that context.¡± Even though the wells were developed with Korean money and technology, there is no room for Korea's claims to the gas rights in this situation, he added.
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The Block A-1 gas field off the northwestern coast of Burma. Daewoo International and the Korea Gas Corporation have a 70 percent stake in three Burmese offshore gas wells including A-1.
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¡ß Power of Energy Power
Daewoo International has spent more than US$110 million to develop the wells off Burma¡¯s northwestern coast. Although Daewoo and other Korean companies have a 70 percent stake in the operation, it is totally up to the Burmese government to decide where the gas will go. The Ministry of Commerce, Industry and Energy said there is a clause in the consortium's development contract stating that the consent of the consortium must be sought when deciding on development methods and prices, but experts said the clause is essentially meaningless because opposing the Burmese government¡¯s decision is tantamount to saying that ¡°you won¡¯t do any business in Burma.¡±
¡ß Failure in Energy Diplomacy
The government failed to inform the public of the full situation and instead focused on exaggerating its achievement in energy diplomacy. Korea needs to build additional facilities estimated to cost some $3 billion to bring liquefied natural gas (LNG) to Korea, and produce 7 million tons of the gas annually to break even. This means that the government¡¯s plan to import 2.7 million tons of gas from there wouldn't be profitable, an expert said. In addition, the new facilities will require a separate consortium and foreign investment.
The reason the government is working so hard to attain the gas rights is because of Korea's chronic gas shortage. Korea has been short by 2 million tons of gas a year since 2005. In the winter of 2005, it saw its gas reserves twice drop below the minimum amount required. ¡°We don¡¯t have any signed long-term contracts to import gas after 2012,¡± a government official said. ¡°The gas wells in Burma could be the most reliable energy source for the country.¡±
In the winter of 2005, it saw its gas reserves twice drop below the minimum amount required. ¡°We don¡¯t have any signed long-term contracts to import gas after 2012,¡± a government official said.
(englishnews@chosun.com )
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