Mutual Cooperation for Energy Issues in Northeast · PDF fileMutual Cooperation for Energy...

1NIPPON OILNIPPON OIL

Mutual Cooperation for Energy Issues in Northeast Asia

Northeast Asia Petroleum Forum 2005September 21, 2005

Fumiaki WatariChairman of the Board

NIPPON OIL CORPORATION

AGENDA

1. Regional Energy Issues

2. National Energy Policy of Japan

3. Regional Cooperation for Energy Issues

1

1. Regional Energy Issues

3NIPPON OILNIPPON OIL 2

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)

Dependence on Imported Crude Oilin Northeast Asia

3,620 3,400

10,75012,660

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

2005 2010

K BD

ImportImportShare+4%

Production

79%75%

Dependence on ImportedCrude Oil in Northeast AsiaOil Demand Growth by Country

6,750

5,410

8,500

2,440

5,120

2,210

0

2,500

5,000

7,500

10,000

12,500

China Korea Japan

K BD

+1,750 K BDAverage +4.7%/y

2005 2010 2005 2010 2005 2010　 China　　　　　　　　　Korea　　　　　　　　 Japan

+230 K BDAverage +2.0%/y

-290 K BDAverage -1.1%/y

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


0

1,000

2,000

3,000

1990 2000 2010

Korea

China

from 1990 to 2010+1,255 million

tonnes

Japan

OtherAsia1,975

2,669

1,414

Korea

Japan4%

Korea8%

China48%

OtherAsia

40%

Three Major Issues to be Addressed

• CO2 emission in Asia will bedoubled from 1990 to 2010.

• Northeast Asia accounts for60% of the increase.

1. Threatened energy security

3. Constraints for sustainable economic growth

2. Increasing CO2 emission

CO2 emission trends in Asia

<Source> IEEJ Asia/world energy outlook

• Fierce competition for energyresources

• Insufficient oil stockpile

• Hovering high crude oil price• Importance of energy-saving efforts

China

KoreaJapan

OtherAsia

million tonnescarbon equivalent


2. National Energy Policy of Japan


National Energy Policy of Japan

1．Objectives of the national energy policy of Japan

EnvironmentalHarmony

EEnvironmentalHarmony

EnergySecurityEEnergySecurity

Efficiency/EconomyEEfficiency/Economy

3E2．Measures taken to achieve the objectives

• Diversification of energy sources• Building of oil stockpile• Energy conservation efforts


5

0

100

200

300

400

500

600

700

1973 1990 2000 2010 2030

77%

16%

41410%10%

57%

17%

520

15%

14%

45%

19%

604

13%

13%

50%

18%

608

18%

15%

42%

17%

6075%

million KLcrude oil equivalent

3%

Oil (incl. LPG)

Coal

LNG

Nuclear

Hydropower &Geothermal energy

Renewables etc

• 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

Primary Energy Supply in Japan

Diversification of Energy Sources

<Source> METI Comprehensive energy statistics


Amount of Oil Stockpile

5681 94 94

76 79 74 79

88 9185

6953

267

0

170

1973 1978 1983 1988 1993 1998 2003 2005/6

days equivalent

Private sector

Government

Building of Oil Stockpile

<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


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.

12.3 12.112.4

12.913.2

13.514.0

14.6 14.715.0

11

12

13

14

15

16

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004(FY)

km/L

BaseYear

453

358 329 301237

411504

0

100

200

300

400

500

600

1998 1999 2000 2001 2002 2003 2004(FY)

kWh/y

Base Year

22%Improvement

Power Consumption of Refrigerator Gasoline Mileage (Passenger Vehicle)

48%Reduction

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

*Weighted average of all gasoline passenger vehicles newly soldin each year <Source> Survey by METI and MLIT


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

1.0 1.62.8 3.3 3.7 4.4

7.3

9.3

18.2

0.0

5.0

10.0

15.0

20.0

Japan EU USA Korea Canada ASEAN MiddleEast

China Russia

Energy consumption in tonnes oil equivalentGDP in thousand US$

Primary Energy Consumption per GDP (Japan) Comparison by Country (in 2002)

*Calculated by the following formula

105

93.990.5

94.391.8 90.3

124

80

90

100

110

120

130

1973 1980 1985 1990 1995 2000 2002

tonnes per thousand US$

*Calculated by the same method as the left graph(Japan=1.0)

<Source> EDMC Energy economics statistics outline


Kyoto Protocol Target

1,331 1,311

1,237

-6%

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

　　　　　　 BASELINE　　　　　 (=1990FY actual)

TARGET LEVEL

(=1990FY-6%)

1,163

+6%+7.6%

Total -12.0

-1.6

-1.7

-3.9

-4.8CO2 emissionfrom energyconsumption

HCFC, Methane

Forestabsorption

CDM etc

• Higher capacity utilization of nuclear power plants• Tighter control on Top Runner standards

Concrete Measures

Greenhouse Gas Emission Trend

-12%

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

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)

unit: million tonnes


3. Regional Cooperation for Energy Issues


Blueprint for the Future• Regionally integrated economy⇒ Interdependent economies⇒ Global trend of regionalism

(e.g. NAFTA, EU)

• Cooperative framework for CO2reduction⇒ Cross-border influences caused

by environmental issues

Unilateral approach of individual country is not adequate.

Key factor for resolving regional energy issues in Northeast Asia:

Regional cooperation among China, Korea and Japan


Mutual Cooperation for Energy Issuesin Northeast Asia

Areas of Cooperation:

EnergySecurityEnergySecurity

Efficiency/Economy

Efficiency/Economy



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

• Effectiveness of environmental protection measuresimplemented by the Japanese petroleum industrye.g. sulfur-free fuels, IGCC*, energy-saving measures

at refineries

2. Technological cooperation in environmentalprotection

*Integrated Gasification Combined Cycle power generation using heavy oil residue

3. Utilization of surplus refining capacity• Deficit of product supply in China• Regional optimization through products trading


ConclusionFor achieving 3E in Northeast Asia

• Regional Cooperation is a key factor.

• Participation in the worldwide efforts to tackle global warmingis recommended. (i.e. the post-Kyoto Protocol regime)

Our sense of “one region”

• Awareness that energy is finite and valuable should befurther developed.

Our actions as a “global citizen”

Our awareness of “finite energy resources”and last but not least...


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