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Northeast Asian Gas & Pipeline Forum

Role of Track-2 Dialogue in Energy Cooperation: Lessons from Northeast Asian

Gas and Pipeline Forum (NAGPF)

Kazuhiko O’hashi Secretary General, Northeast Asian Gas and Pipeline Forum (NAGPF)

Hirofumi Arai

Secretary General, Northeast Asian Gas and Pipeline Forum of Japan (NAGPF-J) Senior Research Fellow, Economic Research Institute for Northeast Asia (ERINA)

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8th International Conference AEC-2012 “Asian Energy Cooperation: Risks and Barriers” Irkutsk, Russia, August 21-23, 2012


Contents

1. Northeast Asian Region

2. Energy Cooperation and “Track-2”

3. Northeast Asian Gas and Pipeline Forum

4. Conclusion

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1. Northeast Asian Region

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Disparities in Northeast Asia

Area Population Pop.

Density GDP (per capita)

thou. Sq.

km

thou. people

per sq. km bil. USD USD

China 9,600 1,337,825 143.4 5,930.5 4,433.0

Japan 378 127,450 349.7 5,488.4 43,063.1

DPRK 121 24,346 202.2 n/a n/a

ROK 100 49,410 508.9 1,014.9 20,540.2

Mongolia 1,564 2,756 1.8 6.2 2,249.8

Russia 17,098 141,920 8.7 1,487.5 10,481.4

Year: 2010 Source: World Bank. World Development Indicators

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Significant economic power: a quarter of world GDP Large disparities = Driving force of cooperation


Energy Balance of NEA Countries

PRC Japan Mongolia ROK Russia

Production 2,084,940 93,791 7,690 44,313 1,181,589

Imports 327,655 402,625 813 242,425 24,071

Exports 52,739 18,166 5,009 44,329 552,699

TPES* 2,257,101 471,992 3,237 229,178 646,915

*TPES: Total Primary Energy Supply Unit: in thousand tonnes of oil equivalent (ktoe) on a net calorific value basis Source: IEA

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NEA countries in the world ranking Year Rank Country Volume

Oil production (mil. Ton) 2010 1 Russia 502

Net oil exports (mil. Ton) 2009 2 Russia 247

Net oil imports (mil. Ton) 2009 2 PRC 199

3 Japan 179

5 ROK 115

Natural gas production (BCM) 2010 1 Russia 637

7 PRC 97

Net natural gas exports (BCM) 2010 1 Russia 169

Net natural gas imports (BCM) 2010 1 Japan 99

6 Korea 43

Coal production (mil. Ton) 2010 1 PRC 3,162

6 Russia 324

Net coal exports (mil. Ton) 2010 3 Russia 89

10 Mongolia 17

Net coal imports (mil. Ton) 2010 1 Japan 187

2 PRC 157

3 ROK 119

Source: IEA

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Topics on Natural Gas

• Cleaner fossil fuel, proven technology and substantial reserves incl. unconventional gas

• “Golden Age of Gas scenario” by IEA – 5.1 TCM in 2035, more than quarter of demand

• Alternative fuel to the nuclear generation – Rising public concerns after the “Fukushima”

– Public debate on three scenarios for 2030……

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Japan’s 3 Scenarios for 2030

• The Japanese government prepared three scenarios for 2030 energy mix in July 2012

• Dependance on nuclear energy is the key.

– “0%”, “15%” and “20-25%” scenarios

cf. Current (before the accident) target: 45%

– Reducing dependance on fossil fuel, while shifting from coal to natural gas

• Government will decide “Innovative Strategy for Energy and the Environment” in August (?).

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Northeast Asian Gas & Pipeline Forum Source: National Policy Unit http://www.npu.go.jp/policy/policy09/pdf/20120720/20120720_en.pdf 9


2. Energy Cooperation and Track-2

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Energy cooperation and Track-2

• Energy security

– “National security”, “National interests”

• Nationalistic public sentiments

– “Zero-sum” thinking

– Case of the ESPO pipeline

• Track-2 dialogue (or Track-2 diplomacy)

– Conflict resolution tool / conflict prevention tool

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3. NAGPF

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NAGPF (Northeast Asian Gas & Pipeline Forum) since 1997

• Objective

– To promote natural gas development and utilization in Northeast Asia through multilateral cooperation.

• Function and Activities

– Informal platform for exchange of views and information

– Biannual international conference on Northeast Asian Natural Gas and Pipeline

– Joint research on long-term vision of natural gas infrastructure in Northeast Asia

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Organization of NAGPF

Executive Committee

President: Mr. Xunzhi Shi(AGPRCC)

Senior Adviser to the President:

Prof. Jianyi Hu (AGPRCC) Mr. Lev. A. Platonov (ROSASIAGAS) Mr. Hyun-Bum Sunwoo(KPGA) Mr. Fumio Sato(NAGPF-J)

Vice President: Mr. Dal Young Park (KPGA)

Prof. Alexander Safronov(ROSASIAGAS) Mr. Amraa Tsengemaa (PAM) Mr. Makoto Haya (NAGPF-J)

Ordinary Member

AGPRCC (China)

PAM (Mongolia)

KPGA (Republic of Korea)

NAGPF-J (Japan)

ROSASIAGAS (Russia)

Sustaining Member

Secretary General: Dr. Kazuhiko O’hashi (NAGPF-J)

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International Conference Since 1995

No. Year Place Remarks

1 1995 Tokyo, Japan #1 in Japan

2 1996 Beijing, China #1 in China

3 1997 Seoul, Korea #1 in Korea

4 1998 Ulaanbaatar, Mongolia #1 in Mongolia

5 1999 Yakutsk, Sakha Republic #1 in Sakha

6 2000 Irkutsk, Russia #1 in Russia


8 2004 Shanghai, China #2 in China

9 2005 Seoul, Korea #2 in Korea

10 2007 Novosibirsk, Russia #2 in Russia


12 2011 Ulaanbaatar, Mongolia #2 in Mongolia

350 speakers and 2,500 participants in total !

Next >>>>> In China, in 2013

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Joint Research

• Drawing a long-term vision of natural gas transport infrastructure, based on aggregated forecasts on supply and demand.

• The 1st output was published in 2000, followed by 4 times revisions.

= Non-binding guidelines for cooperation

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Supply-Demand Forecasts (as of 2009)

Supply 2020 2030

Production Export Production Export East Siberia 55 N/A 57 N/A

Far-East 95 N/A 105 N/A

East Siberia + Far-East

150 PNG 50 LNG 21

162 PNG 50 LNG 28

China 150-180 0 N/A N/A

Consumption 2008 2015 2020 2030

China 80.4 N/A 230.0 N/A

Rep. of Korea 34.8 43.8 48.7 57.0

Japan 101.1 N/A 82.7-114.0 66.0-117.1

Mongolia 0 0 0.4-0.6 N/A

East Siberia + Far-East

9.4 18.0 27.0 32.0

Total 225.7 N/A 388.8-420.3 N/A

Approx. 580 (updated in 2011) 17


Natural Gas Infrastructure Vision

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Advantages and Challenges

• Advantages:

– Wide range of participants

– Their prominent expertise

– Independence from specific interests

– Mutual trust among participants

• Challenges:

– Indirect involvements in policy decisions

– Asymmetric positions of the members

– Dynamic changes of circumstances

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4. Conclusions

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Conclusions

• Northeast Asia is a region of great diversity. Energy resource trades should lead to a win-win cooperation.

• General public may understand energy security issues as a zero-sum game. Track-2 dialogues, like NAGPF, can prevent parties from falling into scrambles for energy.

• NAGPF will serve as a platform of track-2 dialogue for long-term win-win cooperation.

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Thank you for your attention!! http://www.nagpf.info/index.htm

http://www.erina.or.jp

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