Special Reports

Special Reports are longer, often more technical, documents consisting of entire articles, government statements, and other documents relevant to security and peace in Northeast Asia.

NAPSNet, Special Reports

Shale Gas Revolution and Desperate “Eastward” Energy Policy of Russia

North America’s shale gas revolution has fundamentally changed North America’ s energy market, thereby bringing new opportunities and challenges to the Northeast Asian LNG market.

For North America, due to the increase in shale gas production, the export-import structure of gas in the US has been reversed, and the possibility of energy independence has increased. In the meantime, Canada, being almost fully dependent on the US for gas export, can not help but explore new markets, which is in fact the Asian market.

For major Northeast Asian gas importers, such as Japan and Korea, which are heavily dependent upon the Middle East and East Asia, Russia’s East Siberia is considered a new alternative for the purpose of diversifying LNG import sources for the past decade. Therefore, Northeast Asian countries tried their best to secure East Siberian gas through enhancing their bilateral relationships with Russia. However, due to the recent shale gas revolution in North America, the Northeast Asian region now encounters new opportunities in LNG contracts, which is totally different from the situation in the past.

In the mean time, once the negotiation on gas prices between Russia and China is settled, 38bcm of Russian gas will be introduced to China, In this regard, Korea and Japan should pay attention to the possible revamp in the Northeast Asian energy market and the impact related to securing energy supplying sources.

Under these circumstances, the introduction of American shale gas with a cheap price and favorable conditions Ci.e., Henry Hub price, without the clauses of take or pay and destination, etc.), or Canadian gas with relative advantages in terms of transportation distance and gas reserves, is predicted to exert a significant impact on the Northeast Asian LNG market.

Given that Northeast Asia has been significantly dependent on the Middle East or neighbouring East Asia in terms of energy security, if the region become the beneficiaries of North America ‘s shale gas revolution, the most notable thing would be that America and Canada, which have been alliances in political and military contexts, will become alliances of Korea and Japan in energy security as well. It can be referred to as a grand paradigm shift.

Apart from North America, Australia and East Africa have huge potential in gas production, which can enhance the buyers’ power in the Northeast Asian LNG market.

For Korea, the implication of East Siberian gas is not simply limited to the area of energy security, since the PNG project (gas pipeline linking Russia and South Korea via North Korea) based in East Siberian gas fields are considered as important methods to secure peace and prosperity on the Korean peninsula and in Northeast Asia. However, this project is thought to have missed a good time to be commenced, and Russian gas is losing its price competitiveness s compared to North America and Australia.

In conclusion, it is necessary to establish new rules and policies in the Northeast Asian energy market and within the regional situation as a whole. Initiatives on the LNG trading hub in the Asian region should be pushed forward through closer regional cooperation. In particular, Korea, Japan, and China, as major consumers, have to share common interests and make the maximum use of the favorable conditions of the shale gas revolution. Furthermore, the scope of cooperation should not be limited to Northeast Asia, which includes Korea, Japan, China, etc., but be expanded to the Asia Pacific region including North America.

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LNG Import Diversification in Asia

Asia’s share of global demand for natural gas has increased from 13 to 18 per cent over the past decade, and the overall consumption has nearly doubled. At the same time, there is a growing gap between regional natural gas demand and supply, with increasing reliance on imports. Regional liquefied natural gas (LNG) imports are forecast to increase by 60 per cent by 2030, and natural gas has been described as Asia’s “fuel of the future”. Asian LNG importers seek to diversify their supplier mix as much as possible to lower the prices and to reduce economic vulnerability to future disruptions or the failure of any one producer to provide adequate supplies. This paper explores major regional importers’ approaches to LNG import diversification between 2002 and 2012 and explains why patterns of LNG imports differ between states and over time. The focus of the paper is on five largest LNG importers in the region: China, India, Japan, South Korea and Taiwan.

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The Impact of the “Shale Gas Revolution” on Russian Energy Strategy

The successful development of shale gas extraction and production in North America has spread a positive outlook within the international energy community, which envisages that a great availability of gas in the next years will contribute to diversifying the energy mix, reducing emissions, and enhancing energy security. However, the emergence of the “shale revolution” is perceived as a serious energy threat by Russia, because it could severely affect its role as a major gas supplier. Thanks to the combination of LNG developments and shale gas production, a growing gas availability in global markets poses questions about the ability of Russia to keep gas exports to Europe at current levels and to develop the Eastern vector through growing gas exports to Asian markets.
Fabio Indeo holds a Ph.D in Geopolitics, Geostrategy and Geoeconomy at the University of Trieste (Italy). Currently he is EGS researcher and lecturer on “Conflicts and energy resources” at the Master in Peacekeeping and Security Studies (University of Roma Tre, Italy). His research fields are energy security, and geopolitics of pipelines and energy transport routes.

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China’s Shale Gas: Current Perspectives

by Chen Weidong, Jiang Xi-Min and Zhou Xiaolai 11 February 2014 This Special Report was originally published as a Working Paper 2013-6 by the Center for Energy, Governance and Security at Hanyang university, Seoul. I. Introduction The energy sector of China is facing three challenges. This includes ensuring energy supply, reducing carbon emission, and furthering international cooperation. Advancing the E&P of natural […]

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Rethinking Energy Security in Northeast Asia

In this Special Report, Younkyoo Kim writes that despite both governments’ endless profession of an identity of interests between Russia and China, the truth is quite different. On global issues like intervention in third countries, non-proliferation, democracy promotion and Central Asia, Russia and China jointly act to resist US notions of a liberal world order dominated by its power. However, in regard to the regional security agenda in Asia we find only barely concealed and even potentially serious, if unadvertised, rivalries, e.g. in regard to Japan and Southeast Asia. Thus Russia is trying to do two contradictory things at the same time, namely bandwagon with China on the global and anti-American agenda, while attempting to carve out an independent balancing act directed to constrain China at the regional level. Kim contests that the deep-seated regional divergences between Moscow and Beijing throughout Asia have not been resolved and may not be capable of resolution given the dynamic forces at play throughout these areas.

Younkyoo Kim is Director of the Center for Energy Governance & Security and Associate Professor in the Division of International Studies, Hanyang University, Seoul, Korea.

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Assessment of Energy Policy Options for the DPRK Using a Comprehensive Energy Security Framework

The term “energy security” has typically meant little more than securing access to sufficient quantities of fossil fuels at reasonable prices. A broader concept of energy security is needed to adequately consider the full costs and benefits of potential energy policies designed to cope with not only fuel sufficiency and price, but also complex challenges ranging from climate change, to local energy-related pollution, to the social, political, and radiological fallout of the Fukushima nuclear power plant accident in 2011, to cite just a few examples. This paper updates the authors’ concept of a comprehensive energy security assessment framework that includes not only energy supply and economic considerations, but also technological, environmental, social/political/cultural, and international/military security dimensions of energy security. We apply this concept to an assessment of selected energy sector redevelopment “paths”—essentially, quantitative descriptions of energy futures—for North Korea, comparing the relative quantitative and qualitative costs and benefits from each of these energy security dimensions from both the perspective of the DPRK and from the perspective of the broader Northeast Asia (and interested parties) region. We conclude with an exploration of the energy policies that our energy security assessment identifies as “robust”, that is, useful across the full range of energy security dimensions.

David F. von Hippel is a Nautilus Institute Senior Associate. His work with Nautilus has centered on energy and environmental issues in Asia, with a particular emphasis on Northeast Asia and North Korea. Peter Hayes is Executive Director of the Nautilus Institute and a Professor of International Relations at RMIT University.

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The North Korean nuclear issue and Chinese policy

Zhang Tuosheng, a Chinese strategist, argues that China’s policy toward North Korea must change with the times and its policy should always take China’s national interests, other countries national interests and the well-being of those on the Korean Peninsula into account.
Zhang Tuosheng is the Director of Research and Senior Fellow at the China Foundation for International and Strategic Studies (CFISS) and also the director of CFISS Academic Committee. This article originally appeared in the (China) Journal of International Security Studies, Vol 5, 2013. It is re-printed here with the author’s permission.

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Even military dictators dialogued with North Korea

In Paik Haksoon’s inaugural NAPSNet Special Report and Nautilus’ first Korean-language Special Report, Dr Paik argues that in order to have peace, there has to be dialog. The Top leaders from both sides of the Demilitarized Zone have to start that dialog. Simply talking to each other is neither a reward nor unprecedented.
Paik Haksoon (백학순) is a Senior Fellow and Director of the Center for North Korea Studies at the Sejong Institute in Seoul, Republic of Korea. This article originally appeared in한반도 브리핑, 프레시안 on 8 January 2014. It is re-printed here with Pressian’s permission.

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The role of arctic hydrocarbons for future energy security

Against the background of a growing demand for energy worldwide, many claim that the hydrocarbon resources of the Arctic region have become an important variable for future energy security. Multiple factors seem to render Arctic energy resources attractive: the expected persistence of fossil fuels (especially oil and gas) in the global energy mix, instability in oil-supplying countries in the Middle East, and the unclear future of nuclear energy after the Fukushima disaster. Nonetheless, the complexity of resource exploitation in such a remote region as the Arctic, as well as the potential for environmental disasters, raises significant questions about such a proposition. Rather, how promising Arctic resources really are for future energy security concerns is an empirical question requiring careful evaluation. How many resources are actually in the Arctic relative to resources farther south? What are the conditions under which they could be viably and commercially exploited? What interest do the states possessing Arctic hydrocarbons, i.e. the five Arctic littoral states US, Canada, Russia, Norway and Denmark/Greenland, have in exploring and exploiting their Arctic resources? Only after answering these questions is it possible to come to tangible conclusions about the role of Arctic oil and gas for future energy security concerns.

Kathrin Keil is currently a PhD Candidate at the Berlin Graduate School for Transnational Studies(BTS) at the Freie Universität Berlin. She is writing her dissertation on the international politics of the Arctic, with a focus on international regimes and institutions in the areas of energy, shipping and fishing.

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Kim Jong-un’s “Fresh Leap Forward” 2014 New Year Speech

Peter Hayes and Roger Cavazos analyze Kim Jong-un’s 2014 New Year’s speech. They find that the speech provides important clues about North Korea’s perception of its domestic and international environment. Kim laid out his priorities primarily to a domestic audience, but many of the areas he wishes to develop, such as improving the economy and also advancing two specific industries; metallurgy and chemical will also necessitate some degree of opening to the outside world. His priorities also require some amount of external reaching out to North Korea or at least non-rejection of North Korean overtures. Kim reaffirmed his “byungjin” policy of simultaneously developing two fronts: the economy and nuclear weapons. He also upholds the decision to rid the party of “anti-party counterrevolutionary factionalists”. Perhaps in a nod to common experience, the Korean and Chinese language versions characterize the factionalists as “sectarian filth종파오물” or “sectarian dregs宗派污泥浊水“. The English-language version is much more anti-septic. Under normal ‘songbun’ dictates the Kim family would have been subject to jail for being so closely related to a known traitor, but Kim Jong-il established himself as a law unto himself and immune from effects of the law. He is well along the way to establishing himself as the third heir in the “Baektu line”. There were almost no “untrodden paths” in the 2014 address as Kim stuck to roughly the same formulae used in the 2013 New Year’s address. North Korea raises the prospect of conflict – and nuclear conflict at that – in the coming year. This may bode an even more contentious relationship between the U.S. and North Korea in the upcoming year of the Wooden Horse, and will surely be an irritant in U.S.-China relations if not managed well. However, there are particular opportunities for the international community to interact with North Korea on energy efficiency and energy conservation efforts. North Korea clearly wants to convey the impression they are concerned about nuclear war. However, for the second New Year’s address in a row, North Korea has failed to mention nuclear weapons as a “treasured sword” and therefore not a topic for negotiation. The best way to ascertain North Korea’s concerns and intentions is to ask them directly by engaging in Track 11 or Track 1.5 discussions.

Peter Hayes is Executive Director of the Nautilus Institute and a Professor of International Relations at RMIT University. Roger Cavazos is a Nautilus Institute Associate and retired US military officer with assignments in the intelligence and policy communities.

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