IEEJ: October 2005

Mutual Cooperation for Energy Issues
in Northeast Asia
Northeast Asia Petroleum Forum 2005
September 21, 2005

Fumiaki Watari
Chairman of the BoardNIPPON OIL CORPORATIONNIPPON OIL

1IEEJ: October 2005

AGENDA

1. Regional Energy Issues

2. National Energy Policy of Japan

3. Regional Cooperation for EnergyIssues
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IEEJ: October 2005

1. Regional Energy Issues

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Regional Oil Supply and Demand Outlook• Economic growth： 2.9% / year (2000 - 10)• Increase in oil demand： 2.2% / year (2005 - 10)• Dependence on oil supply from outside the region: 75%(2005) →79%(2010)
Oil Demand Growth by Country

K BD
12,50010,0007,500+1,750 K BD
Average +4.7%/y+230 K BD
Average +2.0%/yK BD-290 K BD
Average -1.1%/y

8,500

15,00012,5006,750

10,000

5,410
5,000

2,210

2,500

17,5005,120

Dependence
on Imported
Dependence
on Imported
Crude Oil
Crude inOilNortheast
in Northeast
Asia Asia

7,500

75%

2,500

ImportShare

12,660

Import

3,620

3,400

Production

2005

2010

10,750+4%

5,000

2,440

79%

0020052010
China

China

20052010Korea

Korea

20052010
JapanJapan<Source> 2005: IEA Monthly Report
2010: Estimate by Nippon Oil Research Institute

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Three Major Issues to be Addressed
CO2 emission trends in Asia

1. Threatened energy security• Fierce competition for energy
resources• Insufficient oil stockpile

Japan
4%
OtherAsia
40%from 1990 to 2010
+1,255 million
tonnesmillion tonnes
carbon equivalent

3,000

China
48%

2,669

2. Increasing CO2 emission• CO2 emission in Asia will be
doubled from 1990 to 2010.
• Northeast Asia accounts for
60% of the increase.

Korea
8%

Other
OtherAsia
Asia

1,975

2,000

1,414
China
China

1,000

Korea
Korea

JapanJapan01990

3. Constraints for sustainable economic growth• Hovering high crude oil price• Importance of energy-saving efforts

2000

2010

<Source> IEEJ Asia/world energy outlook

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2. National Energy Policy of JapanNIPPON OIL

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National Energy Policy of Japan
1．Objectives of the national energy policy of Japan

EEnergy
nergy
Security
Security

EEnvironmental
nvironmental
Harmony
Harmony

EEfficiency/fficiency/Economy
Economy3E
2．Measures taken to achieve the objectives• Diversification of energy sources• Building of oil stockpile• Energy conservation efforts
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Diversification of Energy Sources
million KL
crude oil equivalentPrimary Energy Supply in Japan

700
608

600
520

13%

414

10%

13%

16%

17%

18%

77%

57%

50%

1973

1990

2000

500
400
300

14%
15%

10%

200
100

604

15%

Renewables etc
Hydropower &Geothermal energy

Nuclear

18%

LNG

17%

Coal

45%

42%

Oil (incl. LPG)

20102030<Source> METI Comprehensive energy statistics

19%5607

5%3%0• Share of oil in primary energy mix: 77% (1973) → 50% (2000)• Share of oil in power generation: 71% (1973) → 10% (2004)• Oil is projected to be a major energy source: approx. 40% in 2030
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Building of Oil Stockpile
Amount of Oil Stockpile
days equivalent
170

756

26

53

81

94

94

1978

1983

1988

6985

88

91

Government

Private sector

76

79

74

79

1993

1998

2003

2005/601973<Source> Agency for Natural Resources and Energy• Stockpiling on the private sector (from 1972)• Government stockpiling (from 1978)• Current level: 170 days of forward demand (Private and Government)• Mainstay of the energy security measures
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Energy Conservation Efforts（1）“Top Runner Standard” under the Energy Conservation Law
Adoption of the highest efficiency levels achieved by the “top runner”
appliance/machinery manufacturers as a legal obligation for energy
conservation.
Power Consumption of Refrigerator

kWh/y600
500

453

16504411
329

301

Improvement

14237

48%
Reduction

200

22%

15358

400300Gasoline Mileage (Passenger Vehicle)

km/L

1312.9
12.3

12.1

13.2

14.6 14.7

15.0

14.0

13.5

12.4

12100

110
1998

BaseYear

1999

2000

2001

2002

2003

2004

(FY)

*Average power consumption of a typical class per year
<Source> The Energy Conservation Center, Japan

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Base(FY)
Year*Weighted average of all gasoline passenger vehicles newly soldin each year
<Source> Survey by METI and MLITNIPPON OIL

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Energy Conservation Efforts （２）Outcomes of Energy Conservation Efforts• Primary energy consumption per GDP: approx. 30% reduction (1973 to 2002)• Outstanding energy-saving performance among peer countries
Primary Energy Consumption per GDP (Japan)
130

tonnes per thousand US$124

120

Comparison by Country (in 2002)
20.0

18.2

15.0

105

110

9.3

10.0

100

93.9

90.5

94.3

91.8

90.3

90

7.3

5.0
1.0

80

1.6

2.8

3.3

USA

Korea

3.7

4.4

0.0

1973

1980

1985

1990

1995

2000

2002

Japan

EU

Canada ASEAN

MiddleEast

China

Russia*Calculated by the following formula*Calculated by the same method as the left graph

Energy consumption in tonnes oil equivalent
GDP in thousand US$(Japan=1.0)<Source> EDMC Energy economics statistics outline

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Kyoto Protocol Target
Greenhouse Gas Emission Trend
1,331

1,237

1,311

+7.6%

unit: million tonnes

+6%

-12%

BASELINE(=1990FY actual)

-6%

1,163
TARGET LEVEL(=1990FY-6%)

1990(actual)2002(actual)2010(forecast)2010(target)

CO2 emission
from energy
consumption-4.8

HCFC, Methane-1.7

Forestabsorption-3.9

CDM etc-1.6

Total-12.0

Concrete Measures• Higher capacity utilization of nuclear power plants• Tighter control on Top Runner standards
Measures taken by the petroleum Industry• Reduction of energy consumption at refineries• 100% shift to sulfur-free fuels(gasoline & diesel oil, from January 2005)• Introduction of biomass fuels (under feasible study)

Accounts for 1.1% CO2 reductionin Japan (approx. 14 million tonnes /year)

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3. Regional Cooperation
for Energy Issues

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Blueprint for the Future• Regionally integrated economy⇒ Interdependent economies⇒ Global trend of regionalism(e.g. NAFTA, EU)• Cooperative framework for CO2reduction⇒ Cross-border influences causedby environmental issues

Unilateral approachof individual country
is not adequate.

Key factor for resolving regional energy issues in Northeast Asia:

Regional cooperation among China, Korea and JapanNIPPON OIL

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Mutual Cooperation for Energy Issues
in Northeast Asia
Areas of Cooperation:

1. Reinforcement of oil stockpiling• Japan :170days, Korea:106days, China: - (2005〜)• Transfer of oil stockpiling know-how accumulatedin Korea and Japan

2. Technological cooperation in environmental
protection• Effectiveness of environmental protection measures
implemented by the Japanese petroleum industry

EnergyEnergySecurity
Security

Environmental
Environmental

Harmony
Harmonye.g. sulfur-free fuels, IGCC*, energy-saving measuresat refineries*Integrated Gasification Combined Cycle power generation using heavy oil residue

3. Utilization of surplus refining capacity

Efficiency/
Efficiency/
EconomyEconomy• Deficit of product supply in China• Regional optimization through products trading
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Conclusion
For achieving 3E in Northeast Asia
Our sense of “one region”• Regional Cooperation is a key factor.

Our actions as a “global citizen”• Participation in the worldwide efforts to tackle global warming
is recommended.
(i.e. the post-Kyoto Protocol regime)and last but not least...

Our awareness of “finite energy resources”• Awareness that energy is finite and valuable should befurther developed.
Contact: report@tky.ieej.or.jp

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