South Korea says dependency on oil shrinking
Date: 14-Feb-03
Country: SOUTH KOREA
The country is keen to diversify away from oil in order to avoid price shocks to its economy, a factor highlighted by the recent surge in crude prices fanned by concerns about a conflict in Iraq.
The oil share in Seoul's energy mix fell to 49.4 percent in 2002, against 50.6 percent in 2001, marking the lowest level since 1990, state-run Korea National Oil Corp (KNOC) estimated.
"The growth rate of oil demand is forecast to be reaching the limit," said a KNOC analyst, Yoon Hyun-tae.
A $1 rise in crude prices on an average basis over a year cuts economic growth in Asia's fourth-largest economy by 0.1 percentage point and costs the country $750 million, official data shows.
The net crude oil importer buys more than 70 percent of its crude from the Middle East and aims to lower the share oil takes in its energy mix to 45 percent by 2011.
South Korea's energy ministry has said oil demand growth would slow over the next three years to average 1.4 percent a year, sharply lower than 7.6 percent during the 1990s.
"We expect the oil share would remain below 50 percent in the years to come as more environment-friendly energy is preferred to fossil fuel," Yoon said.
The share of cleaner liquefied natural gas (LNG) topped 10 percent last year, from 9.9 percent a year ago and 3.2 percent in 1990, he said.
Coal accounted for 24 percent in 2002, nuclear power 15 percent and hydropower 0.7 percent.
South Korea started LNG imports in 1987 after suffering badly from the oil crises in the 1970 and 1980s.
Seoul's energy demand growth is set to slow to 3.5 percent on average a year by 2011.
The energy ministry estimated South Korea's energy consumption in 2002 at 208 million tonnes of oil equivalent.
