On February 14, 2020, GWIKS and East Asia National Resource Center co-sponsored the Korea Policy Forum on “Energy Cooperation between Korea and the U.S.: Opportunities and Challenges.” Moderated by Yonho Kim, Associate Director of the GW Institute for Korea, Dr. Jae-Seung Lee reviewed the core agenda in energy security between the U.S. and Korea and addressed key opportunities and challenges of U.S.-ROK energy cooperation. Followed by Dr. Lee’s talk, Professor Thomas Nicholas Russo commented on Dr. Lee’s presentation as discussant.
Dr. Lee started his talk highlighting that energy security has long been a key policy agenda for Korea and the United States (U.S.). Unlike the past where Middle East was the major oil supplier, a shale energy revolution in the U.S. since the late 2000s has brought the new architecture of energy partnership. He explained that Korea has begun to diversify oil imports in recent years, increasing the U.S. crude oil import. He demonstrated that the share of Iranian crude oil imports dropped to 5.2% in 2018 compared to 13.2% in 2017, while the share of the U.S. crude oil import increased to 5.4% in 2018 compared to 1.2% in 2017. Moreover, since early 2018, the U.S. became the largest crude oil producer in the world. Korea became the second-largest importer of the U.S. crude oil in 2018, followed by Canada.
Dr. Lee sent on and discussed the trend of Korea’s natural gas import and U.S. natural gas export. He showed that an increasing trend in natural gas import has been observed in Korea and that Korea has been trying to diversify the importing countries which resulted in Korea’s LNG import from 23 countries in 2018 compared to 11 countries in 2008. Meanwhile, the U.S. became the 4th largest exporter in the global LNG market in 2018 with Korea being the largest importer of U.S. LNG and saw the increase of the share of LNG in the U.S. total natural gas exports.
Thirdly, Dr. Lee discussed the trend in petroleum industries in Korea and the U.S. Being the 3rd largest U.S. propane importer in 2018, Korea also exported petrochemical products in 2018 which led Korea to compete with the U.S. He said that as both Korea and the U.S. have expanded their refinery and petrochemical industries, these sectors need to find a mutually complementary business portfolio while avoiding unnecessary competition.
However, in other sectors including oil and gas, Dr. Lee emphasized that Korea and the U.S can cooperate to diversify the energy import and to build a reliable partnership respectively. The U.S. crude oil and LNG are available options for Korea’s import diversification strategy as Korea decreases dependence on Middle Eastern oil and gas. Considering other Northeast Asian countries with China being in trade conflicts and Japan reducing LNG imports as it re-operates nuclear power, Korea is a good option for the U.S. as it can expect the continued growth of the U.S. crude oil and LNG imports. Yet, Dr. Lee left a caveat that the cost competitiveness and quality should remain positive, especially considering the Asia premium versus Alliance premium.
Following the discussion of traditional energy, Dr. Lee discussed the alternative energies, including renewables and nuclear energy. He showed the increasing trend of renewable energy generation in both countries as the concerns about climate change increases and said that renewable energy and low carbon projects are receiving enormous attention in both countries for a smooth energy transition. He picked automobile and IT industries for facilitating cooperation in the energy sector since two industries are closely related. Regarding nuclear energy, he explained that despite the decreasing trend of nuclear generation in Korea due to Moon’s plan for ‘phase-out,’ Korea will still relay on current projects for the next few decades. On the other hand, nuclear energy is regarded as a key element of national security and there is a mix of restrictions and hope in the U.S. He highlighted that alliance matters in Korea-U.S. nuclear energy.
In addition, Dr. Lee introduced the Enhancing Development and Growth through Energy in Asia (Asia EDGE), an initiative of the U.S. government to secure energy and develop energy markets in the Indo-Pacific region, and New Southern Policy of Korea which aims to diversify the trading routes and reduce external risks, seeking cooperation with ASEAN countries and India along with the U.S. and Canada. He saw opportunities in expanding technologies with regard to renewable and energy infrastructure business in Southeast and South Asia. However, some of the challenges included difficulties in changing the conceptual approach into the concrete agenda and projects and in guaranteeing mutual benefits and prosperities.
Lastly, he ended with a few suggestions that need further consideration, such as dealing with geopolitical risks, institutionalizing and coordinating the ROK-U.S. energy security dialogue, and strengthening energy cooperation within the ROK-U.S. alliance.
