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Conference Program
9:00~9:30
REGISTRATION
OPENING SESSION
9:30~10:00
- OPENING REMARKS
Amb. MOON Tae-Young (President, Jeju Peace Institute)
- CONGRATULATORY REMARKS
Vladimir KURILOV (Vice-Rector, FEFU)
- KEYNOTE SPEECH
Alexander FEDOROVSKIY (Head of Section of the Asia-Pacific Region
Problems, The Institute of World Economy and International Relations of the
Russian Academy of Sciences (IMEMO))
SESSION I :
Non-Traditional Security Cooperation: Nuclear Energy and Nuclear Safety
10:00~12:00
12:00~13:00
- Moderator: KO Sang-Tu (Yonsei University)
- Presentations:
1) Russian Initiatives in Nuclear Energy within the Asia Pacific
Andrey GUBIN (FEFU)
2) Northeast Asia Nuclear Safety Cooperation: The Case for Russia-South
Korea Partnership
HAN Intaek (JPI)
3) New Developments of Russo-North Korean Relations and the Russian Far
East
YOON Ik-Joong (Hallym University of Graduate Studies)
LUNCHEON
SESSION II :
Non-Traditional Security Cooperation: Transportation and Logistics
13:00~15:00
15:00~15:45
- Moderator: SHIN Beom Shik (Seoul National University)
- Presentations:
1) Eurasia Initiative and Geopolitics of International Transport Corridor(ITC):
Illusions and Reality
SUNG Weon-Yong (Incheon National University)
2) Connecting the Northeast Asian Countries: Issues of Transport System
Development in the GTI Region
Tagir KHUZIYATOV (FEFU)
3) Multilateral Cooperation in East Asia with the Connection of TKR-TSR
YI Seong-Woo (JPI)
BREAK
SESSION III :
Non-Traditional Security Cooperation: Energy Security and Environment
15:45~17:30
18:30~20:30
- Moderator: Artyom LUKIN (FEFU)
- Presentations:
1) South Korea’s Energy Security Matters
DOH Jong Yoon (JPI)
2) Under-Urbanization in North Korea and the Soviet Union
NAM Young-Ho (Shinhan University)
3) Russia’s Oil and Gas Projects in Northeast Asia at Times of Low Hydrocarbon
Prices
Sergei SEVASTIANOV (FEFU)
FAREWELL DINNER
SESSION I
Non-Traditional Security Cooperation:
Nuclear Energy and Nuclear Safety
- Moderator: KO Sang-Tu (Yonsei University)
- Presentations:
1) Russian Initiatives in Nuclear Energy within the Asia Pacific
Andrey GUBIN (FEFU)
2) Northeast Asia Nuclear Safety Cooperation: The Case for Russia-South
Korea Partnership
HAN Intaek (JPI)
3) New Developments of Russo-North Korean Relations and the
Russian Far East
YOON Ik-Joong (Hallym University of Graduate Studies)
Northeast Asia Peace and Cooperation Initiative between Russia and South Korea
RUSSIAN INITIATIVES ON ATOMIC ENERGY WITHIN
THE ASIA PACIFIC
Andrey GUBIN
Far Eastern Federal University
Nowadays, Russia is the global leader in the number of nuclear energy blocks under
commissioning abroad. The state company Rosatom has been building 18 nuclear power
blocks. The high competitiveness is based upon sophisticated modern technologies, all
projects meet IAAE requirements. The most popular export product is 3rd generation
light water reactor. The gross sum of contracts in 2014 exceeded 100 billion USD and
demand tends to grow up as there is an evident need for reliable source of alternative
energy among developing countries. Asia Pacific or even broader Indo-Pacific reckon
on rising economies as the main source of sustainable growth.
Rosatom claims the integrated services as the main competitive advantage. It includes
building plant and grids, training personnel, regular security check and complex
maintenance. The cooperation with nuclear newcomers is encouraged strongly
according to the international principles of the equal access to atomic energy.
Special company Atomstroyexport is delegated to be responsible for all the construction
activities abroad. Technology integrator is Rusatom Overseas that promotes Russian
integrated offers for developing international projects using the scheme build-ownoperate.
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JPI•FEFU•SNUAC•MOFA Joint Conference
One of the famous Russian projects in Asia is Kudankulam Power Plant in India.
Preliminary agreement was signed in 1988, additional in 1998. However the first line
was switched to the national grid in 2013 and is the most powerful and advanced. The
second block is expected to be operational till the end of 2015. In the spring of 2014
Russia and India signed a contract on the 3rd and the 4th lines of Kudankulam Power
Plant.
In Vietnam Russia constructs Ninh Thuan Power Plant of 2 blocks with 2 reactors each.
The most notable in this project that it is sponsored by Russian government by a special
loan given in 2011. The contract presumes establishment and development of the
nuclear scientific center in Vietnam. Some specialists are to study in the Far Eastern
Federal University starting this year.
Two blocks plant also to be constructed in Bangladesh near Ruppur settlement (160 km
from Dhaka). The intergovernmental agreement was reached in 2011 and 2013 became
the year of the launching construction. This project is supported by Russian credit as
well.
Some feasible prospects Rosatom has in Latin America – Argentine examines
possibility of constructing Russian design reactors in addition to initially agreed hydroplant.
One of the most ambitious initiative on atomic energy implementing by Rosatom is
Tianwan Power Plant near Lianyonggang, PRC. There are planned to enter service 4
blocks with sophisticated security system (so called melt-down trap). Two reactors
started working in 2007 and the second line is being constructed now. There were
rumors that Chinese side won’t prolong the project as they insisted on technology
transfer however Russian side had rejected that term. Actually the situation on the 5th
and the 6th reactors isn’t clear, the construction is frozen as China wanted to implement
national technologies those turned to be raw and insecure. Notwithstanding, Rosatom
holds negotiations on starting construction of atomic power plant near Harbing. Chinese
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customers are also seriously interested in developing joint projects of floating power
plants especially for using in Arctic.
Setting China in the focus – there are some expert assessment that PRC can position
itself as a nuclear reactors exporter. As a matter of fact, they have American and French
design reactors and copy it without permission. Contemporary China poses a minimal
threat to atomic energy world market as national products are underdeveloped. But we
should notice that some units up to 2020 will be ready for exporting especially to not so
wealthy and demanding in terms of security standards countries like Pakistan.
One of the most challenging issues is the DPRK nuclear program, including peaceful
energy component.
There were several projects in 1990s and early 2000s on
constructing LWR in DPRK or in adjacent Khasan area. However after Pyongyang
broke the Non-Proliferation Treaty and started military nuclear program all the plans
were finally ruined. Today Moscow’s official position on DPRK energy program is
rather strict – the only way to cooperate is rejoining the NPT and adopting IAAE
guarantees. If earlier there was a chance for DPRK to obtain new nuclear power plants
either from the USA under the framework agreement or from China as a sort of
economic assistance, it seems to be fantastic now. More or less, Russia suggested rather
promising initiative to construct electric grids through the Korean Peninsula as the
energy can be generated in hydro-plants in Siberia and Far East. This project is far less
expensive and risky in comparison with oil and gas pipeline Trans-Korean
transportation system.
Surprisingly, in Republic of Korea where 35% of total energy output is generated by
nuclear plants, is a evident lack of Russian presence. In 2011 Rosatom and KONEPA
(Korean Nuclear Energy Promotion Agency) sealed a memorandum on cooperation
though aimed on bettering image of the peaceful nuclear. In 2013 Korean Ministry of
Science and Innovation and Rosatom claimed 17 joint initiatives in nuclear sphere
including programs on processing radiated fuel, radiation security, nuclear synthesis,
establishing research center on radiation issues etc. Taking into consideration
contemporary Russian-Korean motives for cooperation, Russian experience and Korean
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demand the nuclear specter is rather promising for both countries. Probably, DPRK can
be involved partially if Pyongyang meets international law requirements and choose the
peaceful way of development.
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Northeast Asia Nuclear Safety Cooperation:
The Case for Russia-South Korea Partnership
HAN Intaek
Jeju Peace Institute
I. South Korea’s Middle Power Activism and Nuclear Cooperation
South Korea considers itself a middle power and sees promotion of peace and stability
in Northeast Asia as one of its roles. Its middle power activism is pronounced in its
pursuit of the Northeast Asia Peace and Cooperation Initiative. In particular, it has
demonstrated strong interest in promoting nuclear cooperation in the region.
There are three broad areas of cooperation in nuclear issues. First is nuclear safety,
which is about the safe operation of nuclear power plants. Secondly, there are nuclear
safeguards. Aimed at non-proliferation, these are the measures to ensure that nuclear
materials are used only for peaceful purposes. Recently, nuclear security has gained
significance, as evidenced by the successive Nuclear Security Summits. Nuclear
security is about the physical protection of nuclear material and installations against
intentional malicious acts such terrorism.
South Korea has been committed to the promotion of cooperation in each and every one
of these areas. It was the host of the Nuclear Security Summit in 2012, for instance.
Also, it has been a strong advocate and exemplary model of nuclear non-proliferation
despite or because of North Korea’s nuclear programs. Currently, however, nuclear
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safety seems to be the main focus of South Korea’s efforts to promote nuclear
cooperation.
Its focus on nuclear safety makes sense on several grounds. First is accidental but is no
less important--the Fukushima Daiichi nuclear disaster. A disaster rated as the highest
on the International Nuclear and Radiological Event Scale (INES), it occurred after a
series of tsunamis struck the Japanese nuclear energy facility following earthquakes,
disabling systems needed to cool the nuclear fuel. The gravity of the disaster is only
equaled by the Chernobyl accident, the only other INES rating 7 disaster in history. As
a country geographically and historically close to Japan, South Korea naturally has a
strong interest in developments in Japan, as accidents like Fukushima can affect South
Korea in various ways.
2. Growing Threats to Nuclear Safety in Northeast Asia
While the Fukushima nuclear disaster certainly made nuclear safety a highest policy
priority in countries in and out of Northeast Asia, it is only one of the factors that have
made nuclear safety a most impending issue. Earthquakes and in particular, tsunamis are
not only infrequent but also uncommon in many part of Northeast Asia. As such a
Fukushima-like nuclear disaster is a rare event by many standards. If Fukushima has
raised the importance of nuclear safety, its effect is likely to be one-time and shortlasting.
Nuclear Power Plants in Northeast Asia (as of 2014)
Source: http://nautilus.org/napsnet/napsnet-special-reports/securing-nuclear-safety-in-northeast-asia-rok-proposal-onnortheast-asia-nuclear-safety-mechanism/attachment/fig-1-2/
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Even before Fukushima, there were structural changes that made nuclear safety
growingly important. According to one account, eighty-eight nuclear power plants were
in operation in China, Japan, and South Korea before Fukushima. Not only that, these
three Northeast Asian countries were building thirty-seven new nuclear power plants,
and were planning to add two hundred four nuclear power plants in the coming years!
If everything goes as planned, there will be over three hundred nuclear power plants in
Northeast Asia, making the region number one in terms of operating nuclear power
plants.
While few like nuclear power plants especially in their neighborhood, nuclear power
plants are, and will be, a fact of life in Northeast Asia. Deprived of other cost-effective
means to produce electricity to support huge populations and operate industrial facilities,
these countries have no other viable option than nuclear power plants. As Northeast
Asia becomes the engine of growth for the world economy, its dependence on nuclear
power generation is accordingly deepening, and with it, the risk of nuclear accidents.
The rising risk of nuclear accidents in the region is a challenge that one cannot deny. It
is a challenge that has to be dealt with.
Spread of Radioactive Material from Fukushima
(Predicted by the Japanese Meteorological Agency)
Source:
http://media.daum.net/foreign/others/cluster_list.html?newsid=20110406183308247&clusterid=317079&clusternews
id=20110410162120879&p=mbn
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Spread of Radioactive Material from Haiyang Nuclear Power Plant Accident
(Simulation)
Source: http://ojsfile.ohmynews.com/STD_IMG_FILE/2011/0322/IE001288792_STD.jpg
3. Comparing Responses to Fukushima and Chernobyl
Countries can respond to the rising risk of nuclear accidents individually or collectively.
South Korea’s call for increased nuclear safety cooperation among Northeast Asian
countries is based on the belief that cooperative approach to deal with nuclear risk is
desirable or at least it is not harmful. While we can discuss how desirable cooperative
approach is, what is clear is from the Fukushima disaster that countries in Northeast
Asia hardly embraced cooperative approach. There was not much cooperation among
China, Japan, and South Korea in dealing with the nuclear disaster both during the
accident and afterwards. By one account, Japan did not share information with its
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neighboring countries in time to say the least. It sometimes gave false information only
to correct it later. This is not to simply blame the Japanese government for lack of
cooperation. Its neighbors showed limited interest in nuclear cooperation as well. South
Korea, for instance, is said to have sent only person to Japan to monitor developments
in Japan!
Despite the paucity of cooperation, Japan responded to the crisis better than the Soviet
Union did during the Chernobyl accident. Following excerpts from a Fact Sheet
comparing Fukushima and Chernobyl produced by the Nuclear Energy Institute
demonstrate this point.
 The Japanese government moved rapidly to implement protective measures,
evacuating people and halting food shipments from the area. The government
also distributed potassium iodide to residents near the facility to prevent their
thyroid glands from absorbing radiation. These actions limited any adverse
health effects from the accident.
 Authorities in the former Soviet Union were slow to take action to protect the
supply of food and milk, which led to a spike in thyroid cancers among children
and adolescents from consuming contaminated foodstuffs.
 No deaths from radiation exposure have been attributed to the accident in Japan.
Separate studies published in 2013 by the United Nations (UN) and the World
Health Organization concluded that health risks from radiation released during
the Fukushima accident are minimal, even for those “most affected,” and there
are essentially no health effects outside Japan.
 At Chernobyl, 28 highly exposed workers died within four months of the
accident. Experts say there is “some evidence” of an increased risk of leukemia
and cataracts among workers who received higher doses when engaged in
recovery efforts. Long-term health monitoring of these workers is ongoing. As
of 2005, about 15 children had died from thyroid cancer. Improved monitoring
has been implemented to help ensure that thyroid cancer is detected early, when
it is highly treatable. However, countermeasures taken over the next few years
after the accident kept radiation doses relatively low. The resulting doses
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“should not lead to substantial health effects in the general population,”
according to a 2011 report from the United Nations.
Source: http://www.nei.org/Master-Document-Folder/Backgrounders/Fact-Sheets/JapanComparing-Chernobyl-and-Fukushima
If Japan responded better than the Soviet Union (in relative if not absolute terms), what
do countries in Northeast Asia have to learn from Russia and Europe? While it may be
true that Japan did a better than the Soviet Union as an individual country, Northeast
Asia as a region did not do as well as Europe as a region or Russia and Europe as
partners in terms of working together to deal with nuclear risks.
The following
developments after the Chernobyl accident show then the Soviet Union and Europe
worked together to promote nuclear safety.
(1) Convention on Early Notification of a Nuclear Accident
This convention is a 1986 International Atomic Energy Agency (IAEA) treaty whereby
states have agreed to provide notification of any nuclear accident that occur within its
jurisdiction that could affect other states. It was adopted in direct response to the
Chernobyl disaster. By agreeing to the Convention, a state agrees that when any nuclear
or radiation accident occurs within its territory that has the potential of affecting another
state, it will promptly notify the IAEA and the other states that could be affected. The
information to be reported includes the incident’s time, location, and the suspected
amount of radioactivity release. The Convention was concluded and signed at a special
session of the IAEA general conference on 26 September 1986. It was signed by 69
states, including the Soviet Union, and the Convention entered into force on 27 October
1986 after the third ratification. As of 2013, there are 116 state parties to the Convention.
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(2) Convention on Assistance in the Case of a Nuclear Accident or Radiological
Emergency
This is a 1986 treaty of the International Atomic Energy Agency (IAEA) whereby states
have agreed to provide notification to the IAEA of any assistance that they can provide
in the case of a nuclear accident that occurs in another state that has ratified the treaty.
Along with the Convention on Early Notification of a Nuclear Accident, it was adopted
in direct response to the April 1986 Chernobyl disaster. The Convention was concluded
and signed at a special session of the IAEA general conference on 26 September 1986.
It was signed by 68 states, including the Soviet Union, and the Convention entered into
force on 26 February 1987 after the third ratification. As of 2013, there are 111 state
parties to the Convention.
(3) Association of Regulators of Western Europe (WENRA)
Though not in a direct response to the Chernobyl disaster, nuclear countries in Western
Europe created an association of nuclear agencies or regulatory agencies in 1999. The
Association of Regulators of Western Europe (WENRA) is a regional network of chief
regulators of EU countries with nuclear power plants to improve nuclear safety.
Specifically, it aims to develop:
 a European approach to nuclear safety ;
 provide an independent capability to examine nuclear safety in applicant
countries ;
 to be a network of chief nuclear safety regulators in Europe ;
 to be a place where exchanging experience and discussing significant
safety issues for regulators.
Source: https://en.wikipedia.org/wiki/Western_European_Nuclear_Regulators'_Association
WENRA is consisted of the representatives of authorities or nuclear regulators from 10
countries (in 1999 at the time of creation); as of 2003, WENRA have 17 state members.
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4. The Case for Russia-South Korea Partnership for Nuclear Safety
Note that little comparable cooperative development in Northeast Asia followed after
the Fukushima nuclear disaster. While Northeast Asia does have a framework for
cooperation among regulators similar to WENRA since 2008 but the framework, Top
Regulators’ Meeting or TRM, has been largely a talk shop, not a robust platform
regional cooperation. South Korea’s recent efforts to expand and empower TRM are
noteworthy and commendable in this regard but they are far from sufficient. There is a
limit to what a middle power can do, however. And the limit is even more constraining
if it has to persuade major powers to share sensitive information and reveal weaknesses.
Not only that, relations among China, Japan, and South Korea are at best sour in recent
years due to questions over history and territory.
This author believes that Russia has an important role to play in enhancing nuclear
safety for Northeast Asia. From the ashes of Hiroshima and Nagasaki, Japan emerged
as a world leader for anti-nuclear movement. Similarly, from the ruins of Chernobyl,
Russia can emerge as a world leader for nuclear safety. Also, as an out-of-region
country, Russia can be accepted as an impartial partner and leader for nuclear safety
cooperation in Northeast Asia. This author thinks that a lot of great things can happen if
we can combine South Korea’s middle power activism with Russia’s leadership for
nuclear safety.
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SESSION II
Transportation and Logistics
- Moderator: SHIN Beom Shik (Seoul National University)
- Presentations:
1) Eurasia Initiative and Geopolitics of International Transport
Corridor(ITC): Illusions and Reality
SUNG Weon-Yong (Incheon National University)
2) Connecting the Northeast Asian Countries: Issues of Transport
System Development in the GTI Region
Tagir KHUZIYATOV (FEFU)
3) Multilateral Cooperation in East Asia with the Connection of TKR-TSR
YI Seong-Woo (JPI)
Connecting the Northeast Asian Countries: Issues of Transport System
Development in the GTI Region
Tagir KHUZIYATOV
Introduction remarks
The free cross-border movement of goods and people is one of fundamental principles
of formation and development of any economic region. Experience shows that where
there is an active process of region building, questions of development of transport
infrastructure, ensuring effective merchandising and movement of people, including
both physical, and non-physical aspects (hard and soft), by all means appear among
priorities. Examples of such joint planned approach to development intraregional and a
transregional transport connectivity include the Program of Central Asian regional
economic cooperation (CAREC), the Program of the Greater Mekong Subregion (GMS),
Growth Triangle Indonesia – Malaysia – Thailand (IMT-GT), etc. It should be noted
that these projects have been objects of the development not only by the governments of
the respective countries, but also with the assistance of the international organizations
and agencies of the foreign states. They include, first, Asian Development Bank (ADB),
and the World Bank, the European bank of reconstruction and development (EBRD),
Islamic development bank (IDB), Japan international cooperation agency (JICA), etc.
In a broader vision, projects of development of transregional transport infrastructure
(i.e., a network of the Trans-Asia railroads, Asian highways and "dry ports"), as well as
issues of simplification and harmonization of procedures, norms and rules of cross- 21 -
border and transit movement of vehicles, goods and people, have become a major part
of the agenda of the UN Economic and Social Commission for Asia and the Pacific (UN
ESCAP).
Current state of transport infrastructure development and cross-border
transportations in the NEA
Both in the context of such development in world, and due to the growing economic and
geopolitical importance of the region of Northeast Asia, the current level, potential and
problems of its transport connectivity influence on define opportunities and limitations
of economic development of the specific countries and NEA as a comprehensive
economic system very essentially. Moreover, in case of a divergence of interests of
specific countries of the region the level of economic coherence and interdependence of
these countries will serve as one of important factors at decision-making either in favor
of negotiations, or in favor of the direct conflict.
When discussing about the current state and issues of development of transport in the
region of NEA, three dimensions of a transport connectivity must be kept in mind: a)
national dimension (transport connectivity of the national market); b) regional
dimension (transport connectivity between the countries of the region); c) global
dimension (interregional or transcontinental connectivity). These dimensions, naturally,
are not isolated from each other, and they are interdependent and interrelated. In our
case, such classification of a transport connectivity is proposed for better understanding,
what particular problems belong to what category, and at what level of decision-making
appropriate measures aiming the solving of these problems have to be taken.
This paper mainly deals with the question of an intraregional transport connectivity for
the region building in NEA.
It is necessary to pay attention to the fact that the intraregional relations in NEA are
very poorly institutionalized. In NEA there are no intergovernmental mechanisms or
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organizations which include all the countries of the region (all countries of NEA,
however, are members of UN ESCAP, but this is a different format).
The only intergovernmental mechanism of economic nature uniting the majority of the
countries of NEA is the Greater Tumen Initiative (GTI), and one of five priority fields
of GTI is transport (the others are trade and investments; energy; tourism;
environmental protection). I will remind that GTI represents geographically and
functionally expanded mechanism of the regional cooperation formed in 2005 with the
assistance of the UN Development Program (UNDP) based, in turn, on the Tumen River
Area Development Programme (TRADP) established back in 1991.
After the Democratic People's Republic of Korea (DPRK) left GTI for political reasons
in 2009, 4 countries – the People's Republic of China, Mongolia, the Republic of Korea
and Russia participate in this mechanism of regional cooperation. May I remind, that
geographically, GTI covers the Northeast of China (the Provinces of Heilongjiang, Jilin
and Liaoning and the Inner Mongolia Autonomous District) with the population more
than 138 million people), the Eastern Mongolia (aimags Dornod, Hentii, Sukhbaatar)
with the population of 200 thousand people, the East of the Republic of Korea
(Gangwon Province, Gyeongsangbuk Province, Busan City, and Ulsan City) with the
population of 9 million people, and Primorsky Territory of the Russian Federation with
the population just below 2 million people. Therefore, the population of the GTI region
makes impressive 150 million people, and the territory covers about 2.5 mln sq.km that
is even more impressive. The core decision-making institution of the GTI is the
Consultative Commission, which is composed of Vice-Ministers from the GTI member
governments (from Russia, for example, the supervising body is the Ministry of
economic development).
A certain interest to the GTI has been shown by Japan (first of all, by its western
prefectures interested, in particular, in development of transportations through
Primorsky Territory of goods of the Japan-China trade. In any case, at the expert level
in GTI, including transport issues, Japan is always represented very well.
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The GTI Transport Board, composed of senior officials from transport authorities of
GTI member countries, was established in 2010 to facilitate the development of
adequate transport infrastructure and logistical networks in the region. Transport Board
held five meetings so far (2010, 2012, 2013, 2014, and 2015).
The Transport Board approved the GTI Regional Transport Strategy with Mid-term
Action Plan, which was the key outcome of the Corridors Study Project held in 2012 by
experts from the NEA countries and Canada.
A noticeable step for strengthening of an institutionalization of GTI was taken at the
15th meeting of the GTI Consultative Commission in September 2014 in Yanji
(People's Republic of China). The agreed decision was made on the GTI transformation
to independent intergovernmental organization and completion of its legal registration
by the middle 2016. The new organization will carry out the functions by means of
work of Ministerial council, the Senior Officials Council, Committees on each priority
field and the Secretariat. Besides, member countries agreed that the level of cooperation
in the organization will remain at the ministerial level and agreed about consideration of
increase of level of participation in 2-3 years after the end of process of its
transformation.
In addition, the agreement on encouragement of participation and involvement of Japan
and Democratic People's Republic of Korea to work on the concrete directions of joint
interests for advance of general prosperity of the region of Northeast Asia has been
reached.
In October 2012, Export-Import Bank of China, Export-Import bank of Korea and
Development bank of Mongolia signed the Memorandum on establishment of
Association of export-import banks of the countries of NEA. In August 2013, Russia’s
Vnesheconombank (VEB) joined the Association, and in September 2014, these banks
signed the Framework Agreement on the basic principles of activity of the Association.
The agreement will allow banks to get to collaboration over infrastructure projects
under the auspices of GTI with direct participation of the governments of Russia, the
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People's Republic of China, Mongolia and the Republic of Korea and, in fact, to carry
out in the near future functions of regional investment fund.
The modernization of the railroad Hasan (Russian Federation) – Rajin (Democratic
People's Republic of Korea), restoration of railway communication through Makhalino
(Russian Federation) – Hunchun (People's Republic of China),
emergence of the
Greater Port of Zarubino project, test container transportations from the Province of
Heilongjiang (People's Republic of China) through Suifenhe – Grodekovo to the
Vostochny port to Japan helped Tumen and Suifenhe transport corridors drew an
attention of stakeholders of the GTI member countries as most perspective routes of
international transportation. At the 5th GTI Transport Board Meeting Republic of Korea
delegation presented project proposal “Study on facilitation of cross-border logistics
system between GTR and North Korea” with the objective to facilitate the cross-border
logistics system between the GTR and DPRK through the development and
modernization of border crossing points at the border of China, Russia and North Korea.
Of course, meaning that the GTI is, in fact, the only intergovernmental mechanism of
regional economic cooperation in the NEA, it would be desirable to see its more
impressive results by the 10th anniversary of for 24 years of the existence of the
TRADP/GTI if to reckon since 1991. Regarding the development of transport in the
region, the most important fact is that no one of the proposed transport corridors within
the GTR, in fact, have not become an international transport corridor as such. So far,
they are no more than simply parts of national railroads or roads, ports, border-crossing
points and other objects of physical infrastructure providing domestic and export-import
freight transportation, and transportations of passengers. Not only the share of the
international transit in total volume of transported freights on any of transport corridors
is minimal. These transportation routes have not become regional transport corridors.
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Problems of development of regional transport system in the NEA
The problems of development of transport system in the GTR as the NEA’s core
include, but are not limited to, the following.
1) The major problem is that the GTI, in general, is not in the focus of attention of the
national governments. That is why we have its low profile, low level of participation of
officials, disrespect to proposals of working bodies and experts of GTI, low
involvement of business, low modality of implementation of recommendations made by
the GTI. Treatment of the GTI as a "provincial" mechanism, actually, was deeply wrong
from the very beginning of this program, but nowadays it becomes simply destructive.
2)
Absence
of
multilateral
intergovernmental
agreements
on
cross-border
transportations, harmonization of customs and other authorities, transit, admission to the
national territory of vehicles of other countries forces to place emphasis on bilateral
agreements that from the point of view of the region-building doesn't simplify system of
transportations at all.
3) Different level of economic development of the countries of the region generates
different levels of competitiveness and, respectively, defines different extents of trade
liberalization and transportations.
4) The transport infrastructure, adjacent to border-crossing points from the opposite
sides of borders, is asymmetrical on its capacity and quality. Alongside with diverse
norms, rules and procedures it complicates development of seamless intraregional
transportation of goods and passengers.
5) Non-participation for various reasons of Democratic People's Republic of Korea and
Japan in the GTI actually means that some designed transport corridors remain only on
paper (the West and East Trans Korean corridors) or considerably lose its potential
(Tumen and Suifenhe corridors).
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6) Uncoordinated (both domestically and internationally) plans and projects of
development of border transport infrastructure at best cause disappointment, in the
worst case it take away freight traffics to other routes. For example, "The Greater port
of Zarubino" is the project deserving attention especially as the Summa Group of Russia
for the first time managed to reach an agreements with the cargo owners and the
authorities of provinces of Jilin and Heilongjiang about volumes and the nomenclature
of cargo on short and medium-term prospect. However, the president of the Russian
Railways V. Yakunin said that those plans were not coordinated with his company, and
the capacity of the railroads could be in short supply. The same can be said about the
"coal terminals fever" which captured Primorsky Territory where there are plans not
only considerable expansion of the existing coal terminals, but also construction new
(for example, "The Siberian business union" intends to construct the terminal with
capacity up to 20 million ton a year). In addition, Jilin Province authorities informed
that they are ready to import up to 60 million ton of coal through Makhalino bordercrossing point.
Proposals
The analysis of transport problems in the GTR that is the core of the NEA, allows
making the following proposals, which will promote increase of efficiency of regional
cooperation in development of the regional transportation system.
1) Increase of the GTI level both in terms of its institutionalization (transformation to
independent intergovernmental organization), and in terms of the range of fields of
cooperation was already included into the agenda of the GTI. However, the offered
gradual increase of representation to the level of ministers is not enough nowadays for
full functioning of the organization of regional cooperation taking into account
considerable number of priority spheres. The countries need to be represented by deputy
prime ministers with visible prospect of increase of level of representation to heads of
governments. In addition, ministers have to represent their countries in the relevant
committees.
- 27 -
2) Efforts should be made on involvement into the GTI activities of Democratic
People's Republic of Korea and Japan in appropriate scale and fields of mutual interest.
Their participation is very important in the sphere of the regional transport system, even
if in the status of observer or associated member.
3) The issue of expansion of the number of territories of the Russian Federation
participating in the GTI is worth to consider. Namely, these are the territories located
alongside the Trans-Siberian Railway, like Amur Oblast where Dalian transport corridor
is connected to the Trans-Siberian Railway and the highway Vladivostok – Moscow,
and Zabaykal Territory where Tumen corridor and Suifenhe corridor are connected to
the Trans-Siberian Railway and the highway Vladivostok – Moscow.
4) The fastest possible entry of the Russian Federation into Asian Development Bank is
necessary for simplification of access to financing of the international projects,
including, those in the territory of Russia.
5) The GTI should accept “regional benchmarking", i.e. a set of "road maps" on the
development of transport infrastructure, quality of border crossing points, simplicity and
transparency of procedures, the value of fees and tariffs, etc. to the level of the best
partner in the region in any relevant issue.
6) The GTI, appropriate national authorities and businesses should consider
establishment of coordination boards on each international transport corridor including
major relevant stakeholders.
- 28 -
Multilateral Cooperation in East Asia with the Connection of TKR-TSR
YI Seong-Woo
I.

Introduction
Rapid progress on bilateral cooperation between Russia and North Korea since
late 2014
o Moscow promotes Eastward policy and Far Eastern development
o In order to overcome international isolation from the Ukraine crisis,
Moscow improves diplomatic ties with old friends, such as Cuba and
North Korea
o North Korea strengthens strategic cooperative relationship with Russia in
order to diversify its economic ties and decrease it reliance on China

Seoul regards Tumen river area as a new strategic point at which Russia and
North Korea seek ways to cooperate
o President Park’s Eurasia Initiative is a crucial policy effort to overcome
geopolitical insolation of South Korea, since the policy seeks to connect
South Korea to Eurasian countries by land
o In the short run, South Korea has to improve inter-Korean relations.
However, Eurasia Initiative enables peace and prosperity in the Korean
Peninsula and ultimately the unification in the long run.

As South Korea participates in the Najin-Hassan project, it is necessary to
calculate the opportunity and cost of the project
- 29 -
o POSCO, Hyundai Shipping, and KORAIL form a consortium to
participate in building a distribution center through the renovation of
railroad and port in Najin and Hassan.
o As part of a pilot project in 2014, South Korea imported 45,000 tons of
Siberian coal from the port in Najin to Pohang. In terms of logistic costs,
the new route can save half of the cost.
o The new route appears to provide a new approach to resolve the
aggravated inter-Korean relationship since the 5.24 sanction.

South Korea is required to find a way to collaborate for peace in Korean
peninsula and multilateral cooperation in East Asia with the connection of TSR
and TKR and economic cooperation
o It will analyze the interest of relevant parties including the United States,
Japan, and Mongolia
II.

History of South Korea, North Korea, and Russia
During President Putin’ first term, North Korea and Russia began the railroad
project in 2000 and agreed on the cooperation project in 2001. However the
project has never been implemented
o Although the project has been started as a part of Tumen River Area
Development Program (TRADP), it has been canceled due to insufficient
financial resources.
o On the other hand, Russia initiated the railroad project in order to check
the growing influence of China that sought access to the East Sea.

As South and North Korea agreed on the connection of Kyoungui Line in the
summit meeting on June 2000, it became feasible to connect TRS and TKR.
o Russia planned to utilize the new traffic route to develop the Siberian
and Far Eastern province.
o From the beginning, Russia was positive and proactive in order to
transfer the sea line cargo into the land route freight from Japan and
South Korea.
- 30 -

In 2007, South Korea agreed on the trilateral cooperation with Russia and North
Korea on the renovation of Najin-Hassan railroad and the modernization of the
Najin Port. Lee Myung-bak administration was pessimistic on this trilateral
cooperation. Even with the 5.24 measures after the Chonan issue, South Korea
suspended the cooperation as a part of sanction against North Korea.
o South Korea preconditioned the denuclearization of Korean Peninsular
for inter-Korean economic cooperation.
o Russia also required the denuclearization then.

Russia and North Korea agreed on the responsibility of the cost for the
renovation of Najin-Hassan railroad and the modernization of Najin Port and
reopened these facilities on September 2013.
o Russia took care of the cost (300 billion USD) for the railroad renovation
and port modernization.
o Russia constructed the complex railroad system covering broad and
narrow gauge without replacing the train wheel.
o By building 18 bridges and 3 tunnels and installing the signal and
communication system, the railroad improved its speed up to 6-70km per
hour.
o Russia regards the railroad renovation of Najin-Hassan as a pilot project
of connecting TSR and TKR.
o Russia expects the cargo business handling 4 million ton of exporting
goods to European markets

Russia led the railroad modernization project with North Korea
o Russia plans to perform a regional entrepot center by utilizing its
geopolitical advantage and enhances the economic cooperation by
multilateral trade among East Asian countries.
o As an initial step, Russia invested 25 billion USD to renovate the railroad
and port systems in North Korea. North Korea agreed on providing labor
force for the construction. Based on the contract of repayment for the
investment, North Korea will pay back the cost by exporting natural
resources such as gold, silver, copper and nickel to Russia.
- 31 -
III.

The Relationship between North Korea and Russia
During the early post-Cold War period, Russia pursued non-ideological, nonimperial and pragmatic foreign policy in order to receive economic assistance
from the West
o The Yeltsin administration engaged in the so-called Atlanticism, seeking
an appropriate role for Russia in international relations through strategic
alliance with the U.S. As the Western countries tried to expand the
sphere of NATO and exclude Russia from the international sphere in the
mid-1990s, Russia abandoned Atlanticism and turned to Eurasianism,
with which it repaired ties with old allies from the Cold War era.
o Recently, after the Ukraine incident, Russia strengthened the relationship
with old allies such as Cuba and North Korea. Russia adopted
orientalism as part of its counterstrategy to prevent the recession of
Russian influence in Eastern Europe.

From the beginning of the post-Cold War era, North Korea as a minor power
was forced to transform its alliances.
o On the process of reorganizing the international order led by the U.S. ,
North Korea experienced the collapse of traditional alliance with China
and Russia
o While South Korea established diplomatic relationships with Russia and
China, North Korea faced diplomatic isolation and security threat. North
Korea maintained equidistance diplomacy with China and Russia as a
survival strategy.

At the beginning of the post-Cold War era, the relationship between Russia and
North Korea was abruptly disrupted but gradually reestablished.
o At the summit meeting between Yeltsin and Kim Young-Sam in June
1994, Kim requested Yeltsin to denounce the treaty between Russia and
North Korea in 1961. Accepting South Korea’s request, Russia notified
North Korea not to renew the treaty. Therefore, the treaty became invalid
as from September 1996.
- 32 -
o Russia and North Korea resumed the negotiation and signed the treaty
which is not a military alliance but a bilateral cooperation treaty.
o When Putin visited Pyoungyang and had a summit in July 2000 and
when Kim Jung-Il visited Moscow and Vladivostok in July 2001 and
July 2002 respectively, they restored the bilateral relationship

Russia pursued the bilateral relationship with South Korea at the cost of
neglecting its diplomatic ties with its traditional ally, North Korea.
o As Russia faces the diplomatic isolation from the Ukraine crisis and
Western sanctions, it tried to restore traditional diplomatic ties with Cuba
and North Korea as a part of a response to the U. S.
o The relationship between Russia and North Korea does not mean
military alliance. Instead it aims for a normal bilateral cooperation.
Therefore, Russia and North Korea cooperate in economic issues such as
connecting TSR and TKR, renovation of North Korean railroad and port
system, and trading natural resources such as natural gas and mines.

At the early stage of the post-Cold War era, North Korea heavily relied on China
as a survival strategy. The new leader of North Korea converts his foreign
policy toward the equidistance approach between Russia and China
o Russia negotiated the cancellation of North Korean debt from 2011 and
they signed on the agreement in 2012. The agreement took effect on May
2014 after the Duma ratified it and Putin signed it.
o Russia wrote off 10 billion USD out of total debt of 11 billion dollars.
Concerning the rest, 1.9 billion USD, Russia allowed North Korea to pay
it back in 40 installments over a 20-year period. In case North Korea
fails in repayment, Russia will reinvest into North Korea’s social
overhead capital such as health, education, and energy.

By improving its influence on North Korea with cooperative aid, Russia can
control Chinese expansion in the Tumen region and check Chinese influence on
North Korea.
IV.
Northeast Asia Peace and Cooperation Initiative and Connection of
TKR and TSR
- 33 -

Park’s administration launched a couple of multilateral cooperation initiatives,
such as the Northeast Asia Peace and Cooperation Initiative, Eurasia Initiative,
and Trust-Building Process for the preparation of Korean unification
o Park regards Russia as the most crucial partner for multilateral
cooperation in East Asia. Putin is also proactive in pushing forward
Russia’s “return to Asia” policy.
o This policy correspondence between South Korea and Russia enhances
the possibility and expectation for the multilateral cooperation in East
Asia

In order to initiate a multilateral cooperation and connect South Korea to the
Eurasian continent, South Korea needs to achieve peaceful inter-Korean
relationships as a preliminary condition.
o Fortunately, South Korean business circles are interested in the
collaboration of connecting TKR and TSR. And political circles
welcomed the cooperation with Russia as a starting point to attain
‘Unification Bonanza.’

With the cooperation in railroad connection, South Korea extends its scope of
cooperative measures to the connection of natural gas pipeline.
o In terms of technical and economic aspects, it is possible to build the
total 1,122km pipeline consisting of 150 km from Russia to the border to
North Korea, 740 km of North Korean section, and 232 km of South
Korean section.
o Although North Korea can expect the transit fee of 140 million dollar per
year, political instability and uncertainty of North Korea is the biggest
impediment for South Korean investment.

North Korea becomes active in the Najin-Hassan project and Nasun special
economic zone in order to revitalize the lagging economy.
o North Korean authority expressed its concern about South Korean
participation in the Najin-Hassan project, when a deputy director of
South Korea’s Ministry of Unification visited there.
- 34 -
o North Korea also founded ‘Najin marine college’ to train specialists on
logistics who can manage facilities in the modernized Nasun special
economic zone.

South Korea selects Russia as a strategic partner for the connection of TSR and
TKR. China can regard this situation as revising the status quo of East Asian
regional order in which China has taken a leading role.
o China has long been interested in the underground resources of North
Korea. Russia can monopolize the development of North Korean
underground resources after the success of the railroad cooperation
between Russia and North Korea.
o Since North Korea tries to reduce its reliance on China, it results in
losing Chinese influence on North Korea.
o More importantly, despite Chinese desire to participate in the multilateral
railroad cooperation among North Korea, South Korea, and Russia,
Russia’s stance regarding Chinese participation is complex: officially
welcoming but covertly opposing.

From American perspective, the railroad cooperation and the summit meeting
between North Korea and Russia can be the anti-American policy coordination.
o The United States considers military security issues more important than
economic issues in East Asia.
o Russia points out that the U.S. Forces in Korea are the major impediment
to Korean unification. As long as tension and hostility remain in the
Korean peninsula, it will be hard to connect TSR and TKR in the near
future.
o The U.S. wants to maintain its hegemonic status in East Asia by
strengthening the trilateral cooperation with South Korea and Japan.
Unfortunately for American expectations, the bilateral cooperation
between South Korea and Russia and the trilateral cooperation between
South Korea, North Korea, and Russia will threaten American hegemony
in East Asia.
o The U. S. wants to avoid this type of an undesirable cooperation, which
in its view ultimately results in uncontrollable disorder.
- 35 -
V.

Conclusion: Policy Suggestion
South Korea considers the railroad cooperation as a rehearsal-run for
reunification, to test how far South and North Korean collaboration can reach in
producing mutual and common interest.
o South Korea can take great benefits from the railroad cooperation by
overcoming the status of “political island” and connecting to the Eurasia
continent.
o In order to prepare for Korean unification, South Korea has to strengthen
diplomatic ties not only with traditional allies but also with the old
adversaries.
o In case of emergencies and contingencies, South Korea has to secure
American support and cooperation for a South Korean-led Korean
unification and neutralizes opposition from China and Russia.

The railroad cooperation is related to security rather than to economy and
development. South Korea has to consider the railroad cooperation from a
regional security point of view.
o While North Korea and Russia try to utilize the railroad cooperation as a
foreign policy tool to challenge the regional order, the U.S. and China
are cautious about the emerging cooperation.
o The U.S. and China can take advantage of the status quo regional order
which enables them to secure their status and interests. South Korea has
to pursue a multilateral cooperation that may not infringe national
interests of the two great powers.

South Korea has to develop an independent pathway for the cooperative interKorean relationship and ultimately unification.
o When it comes to inter-Korean cooperation, South Korea wants to
eliminate political instability and unpredictability of North Korea
through multilateral approach and/or with a third party guarantor.
o Russia and even China cannot resolve North Korea’s obstinate behavior
which appeared in the Mt. Geumgan Tourism project and the Gaesung
- 36 -
Industrial Complex project. As shown in the process of resuming the
Gaesung case, South and North Korea had to settle it with direct
negotiation and agreement. Russia and China cannot guarantee anything
about the inter-Korean cooperation and North Korean behavior.

As functionalism informs, South Korea has to extend the scope of multilateral
cooperation.
o The possible candidates are logistics, manufacture, tourism, energy,
environment, and agriculture. Extended cooperative sections are more
attractive to more countries.
o The success of multilateral cooperation is related to not to how many
countries are involved but to how many business sectors deserve the
foreign direct investment.
- 37 -
SESSION III
Energy Security and Envir
- Moderator: Artyom LUKIN (FEFU)
- Presentations:
1) South Korea’s Energy Security Matters
DOH Jong Yoon (JPI)
2) Under-Urbanization in North Korea and the Soviet Union
NAM Young-Ho (Shinhan University)
3) Russia’s Oil and Gas Projects in Northeast Asia at Times of Low
Hydrocarbon Prices
Sergei SEVASTIANOV (FEFU)
South Korea’s Energy Security Matters
DOH Jong Yoon
I.
Overview on S. Korea and its Energy
S. Korea has been evaluated as a dynamic developing country since 1945, and now its
economic level is “high income group”, indicated by OECD and GNI per capita arrives
at $27, 090. In world level, the World Bank estimates its GDP as the 11th ($1,410 trillion)
in 2014.
<Graph1>
- 41 -
(Source: IMF World Economic Outlook, 2015)
Meanwhile, energy consumption is usually related with economic dynamism. So, it is
necessary to look at ‘Primary Energy Consumption’ in the World level, firstly.
<Table 1>
Primary Energy Consumption in the World, 2011
Million Tonnes of
Rank
Country
1
China
2,544.8
21.72
2
US
2,265.4
19.34
695.9
5.94
3
Russian
Federation
Oil Equivalent
%
4
India
534.6
4.56
5
Japan
481.2
4.11
6
Canada
328.1
2.8
7
Germany
307.5
2.63
8
Brazil
269.3
2.3
9
South Korea
267.8
2.29
10
France
245.
2.09
11
Iran
237.6
2.03
12
Saudi Arabia
208.1
1.78
196.3
1.68
13
United
Kingdom
14
Mexico
186.2
1.59
15
Italy
169.5
1.45
16
Indonesia
159.8
1.36
17
Spain
142.4
1.22
(Source: Korea Energy Statistics Information System)
- 42 -
Energy production and self-sufficiency are a kind of index to measure economic
influence, industrial production and dynamism of future. S. Korea’s energy production
and total energy self-sufficiency are as following tables.
<Table 2>
Energy Production in OECD, 2013
Energy Production
Rank
Country
1
United States
1,859.34
2
Canada
434.96
3
Australia
344.83
4
Mexico
217.46
5
Norway
188.46
6
France
135.96
7
Germany
119.72
8
United Kingdom
109.28
9
Poland
70.25
10
Netherlands
69.36
11
S. Korea
43.52
12
Italy
34.73
13
Spain
33.85
14
Sweden
33.88
15
Turkey
30.31
(Mtoe)
(Source: International Energy Agency)
- 43 -
<Table 3>
Total Energy Self-sufficiency in OECD, 2013
Rank
Country
%
1
Norway
5.72
2
Australia
2.67
3
Canada
1.73
4
Mexico
1.19
5
Denmark
0.96
6
Estonia
0.92
7
Netherlands
0.9
8
Iceland
0.89
9
United States
0.85
10
New Zealand
0.84
11
Poland
0.72
12
Czech Republic
0.72
13
Sweden
0.71
14
United Kingdom
0.57
15
France
0.54
16
Finland
0.54
17
Slovenia
0.53
18
Switzerland
0.48
19
Hungary
0.45
20
Greece
0.4
21
Slovak Republic
0.39
22
Germany
0.38
23
Austria
0.37
24
Chile
0.36
25
Spain
0.29
26
Belgium
0.29
27
Israel
0.26
- 44 -
28
Turkey
0.26
29
Portugal
0.25
30
Italy
0.23
31
Ireland
0.19
32
S. Korea
0.17
33
Japan
0.06
34
Luxembourg
0.03
(Source: International Energy Agency)
*Total energy self-sufficiency= Energy Production/Total primary energy supply.
As above all, S. Korea’s energy consumption is much higher than production. However,
it is characterized that the level of total energy self-sufficient is very low -32th- in 34
OECD countries. This means that S. Korea is relatively vulnerable to energy production
while its energy consumption is higher than average level in the world. In 2015, S.
Korea’s energy dependence arrived at 95.8%.
<Graph 2>
S. Korea’s total primary energy consumption by 2012
- 45 -
As seen the graph, S. Korea heavily relies on fossil fuel resources (coal and petroleum,
69%) while renewable resources is small portion. Therefore, S. Korea should pay
attention to the sustainable supply of traditional energy resource as well as the
development of new technology for energy production. S. Korea is gradually increasing
the dependence of the nuclear power plant and natural gas but at the same time, has
faced opposition to construction of nuclear power plant in domestic politics. Although
natural gas has the advantage of a low carbon dioxide emission, high safety and
abundant reserves, thermal efficiency is low and infrastructure such as the charging
station is insolvent.
<Graph 3>
S. Korea’s LNG imports by source, 2013
Russia is a critical partner of LNG source for S. Korea covering 5%(7th) of all imported
LNG over the world. It is necessary for S. Korea to build ways of energy resources
available to sustain its economic growth.
- 46 -
I.
National Energy Mater Plan
Broadly speaking, energy security has many aspects. International Energy Agency
defines,
“Energy security as the uninterrupted availability of energy sources at an affordable
price…. Long-term energy security mainly deals with timely investments to supply
energy in line with economic developments and environmental needs. On the other hand,
short-term energy security focuses on the ability of the energy system to react promptly
to sudden changes in the supply-demand balance.”
For a long time, S. Korea has been interested in energy management because it has a
vulnerability of energy supply. In 2008, S. Korea government released “The National
Energy Plan that is under the slogan of “Green Growth Policy” that makes a
combination of ‘Security’, ‘Efficiency’ and ‘Environmental Protection’. Then, Park
Geun-hye administration revised it, calling “The Revised National Energy Plan” in 2013.
The latter’s one of main points is to increase the level of energy independence and to
reduce the dependence on nuclear energy plant in long-terms.
<Table 4>
National Energy Master Plan
The
National
Energy The Revised National Energy Plan
Plan
Period
2008-2013
2014-2035
Five (Six) Main Energy Independence
Points
(3%->40%)
Energy Demand Management
(15%
reduction
of
electricity
consumption )
Post-oil society
Building of Distributed Resources
(Reliance on oil 43% -> System
33%)
(15% of total energy supply)
Low energy consumption Environmental Protection
- 47 -
society
(Greenhouse gas reduction up to
20% in Power Plant)
Green
Technology
and Energy Security
growth
(Self-sufficiency
of
resource
development up to 40%, New &
Renewable Energy up to 11%)
Energy Poor
Introduction of ‘Energy Boucher’
7%->0%
for poor
Stable Supply of Traditional Energy
Resources
Nuclear Plant
41%
22-29%
New & Renewable 11%
11%
Energy
Firstly, ‘the uninterrupted availability of energy sources’ is the core of energy security of
S. Korea as well. Since political and economic instability in international society
adversely affects the price and the supply of energy resources. Apart from North Korea
issues as it is well known, S. Korea’s land is narrow and lacks natural/energy resources
to use self-supply. So, S. Korea focuses on increasing the level of energy independence
as an energy security policy. Secondly, more concretely, S. Korea has plans to make ‘15%
reduction of electricity consumption’ through for instance, revision of progressive price,
energy-saving movement,
incentives for energy saving company, and to decrease
‘reliance on oil’ as long-term policy. Furthermore, it is promoting a ‘Distributed
Resource System’, which is strengthening self-generation electricity system, and make
target up to 15%- covering of total energy supply. S. Korea in particular concentrates
on construction of ‘Smart Grid’. Thirdly, S. Korea conducts ‘Self-sufficiency of
resource development’ up to 40% and ‘New & Renewable Energy’ up to 11% until 2035.
- 48 -
II.
S.
Korea’s Smart Grid
For S. Korea, ‘Smart Grid’ is an ambitious attempt from perspective of environmental
protection as well as energy security. U.S.(2003), EU(2006), Japan(2009) and
China(2010) are already launched a vision for smart grid project to activate
development of renewable energy and electricity trade between neighbor countries.
Smart Grid embraces all energy demand managements and environmental protection as
an energy strategy for future. ‘Smart Grid’ is a kind of a next-generation electric
network that information technology applied traditional electrical grid. In the production
and distribution of electricity, international society expects that it will improve the
stability, efficiency, and reliability.
<Pic.1>
(Source: Korea Univ. Power & Economic Lab. http://smartgrid.korea.ac.kr/?page=research/Smart_Grid)
- 49 -
-
Smart Transportation: Electric Vehicle, Electricity Charging Point
-
Smart Electricity Market: Integrated Electricity Management server
-
Smart Place: Smart Building, Smart Factory, Smart Home
-
Smart Distributes Generation: Photovoltaic system, wind power station,
energy storage facility, fuel cell complex
-
Smart Utility Network: waterpower generation, thermal power generation,
electric power substation
As a pilot project, S. Korea has designed ‘Jeju Island’ as a model for smart grid complex
from 2009 and ploughed than $200 million with private–sectors for instance LG
Electronics, KEPCO, SK Energy, GS Caltex and Hyundai Heavy Industries.
<Pic2>
(Source: Yonhap news)
- 50 -
In this context, Jeju Special self-government province is also making a project “Carbon
Free Island” that will replace gasoline/diesel to electricity vehicle covering up 10% by
2017, 20% by 2020 and 100% by 2030. Although electricity vehicle in Jeju is 852 of
total vehicles 294,488, currently,
in the Jeju Forum 2015, Won hee-ryong, Jeju
Province governor, declared “Energy Peace in Jeju” that means island of energy selfsufficiency through renewable energy will be made in near future.
<Pic3>
Electricity Charging Infrastructure in Jeju Island
(Source: SKbattery http://www.skbattery.co.kr/who/result_smart_grid.aspx)
III.
Energy Security and Northeast Asia Peace and Cooperation Initiative
S. Korea government has constantly sought the cooperation and prosperity in Northeast
Asia. In particular, “Northeast Asia Peace and Cooperation Initiative(NAPSI)”,
proposed by Park Geun-hye government in 2013, is to constructing “a process for the
building of an order of multilateral cooperation and trust” in the region “through
accumulating a practice of dialogue and cooperation to build trust on the basis of a
- 51 -
shared vision and recognition.”
S. Korea is confronting multiple security dilemma and challenges apart from traditional
security issues including North Korea. S. Korea’s energy strategy is new pillar to secure
its entity. So, its strategy concentrates on two kinds: to secure supply of sustainable and
stable energy resource, and to promote project of Smart Grid to manage efficiently
resources. The latter is also a kind of method to preserve the former. It is necessary to
conceive a kind of institution in Northeast Asia, so-called, “Energy Management
Mechanism” to manage Smart Grid, energy import-export, and renewable energy.
- 52 -
RUSSIA'S OIL AND GAS PROJECTS IN NORTHEAST ASIA
AT TIMES OF LOW HYDROCARBON PRICES
Sergei SEVASTIANOV
According to the Energy Strategy of Russia for the period up to 2030, 25% of oil
exports and 20% of gas exports should be shipped to the Asia-Pacific region1. China,
Japan and the South Korea comprise 27% of the world primary energy consumption that
is why the Northeast Asia is one of the most attractive energy markets for Russia.
Moscow strives to diversify its energy exports in order to reduce dependence on the
European market and increase Russia’s share of the rapidly growing energy market in
the Northeast Asia. Considering the current political tension between Russia and the EU,
the issue of Russian energy exports to the Northeast Asia becomes increasingly
important.
There are some factors that limit energy cooperation between Russia and countries of
the Northeast Asia:
- High extraction and transportation costs of energy resources of the Eastern
Siberia and the Russian Far East (RFE);
- Poor transport infrastructure;
- Insufficient geological exploration;
- Deficit and inefficient use of domestic investment resources;
- Complexity of attracting foreign investment;
- Adverse climate conditions.
1
Energy Strategy of the Russian Federation for the period up to 2030: approved by the Government Edict
#1715-р, 11.13.2009. http://www.energystrategy.ru/projects/docs/ES-2030_(Eng).pdf
- 53 -
In addition to these factors, a sharp decline in oil prices, which happened in the end of
2014, limits the prospects of existing and future oil and gas projects in the region,
despite a slight increase in prices in early 2015.
The Ministry of Energy of Russia considers that a fair price for oil is $80-90 a barrel. In
that case, Russian oil and gas companies will be able to:
- conduct their programs for geological exploration;
- increase extraction and transportation of hydrocarbons in the existing projects;
- launch new oil and gas projects;
- pay tax, customs duties and social transfers;
- service their loans.
Minister of Energy of Russia A. Novak supposes that the current level for oil price at
$55-60 a barrel is not an equilibrium price and the oil price will increase soon. He
assumes that the price increase depends on how quickly inefficient projects, which are
unprofitable at low oil prices, will be abandoned worldwide 1 . The Government of
Russia is not worried much about financial position of the Russia’s oil and gas
companies. Deputy Prime Minister of Russia A. Dvorkovich, who is responsible for
energy sector in the Government, considers that if the oil price will be in the range of
$50-60 a barrel, it will not cause a decline in production. The Government fully
supports Gazprom and Rosneft - the largest gas and oil companies in Russia, and their
investment programs have the top priority. For example, some infrastructure projects in
the Eastern Siberia and the RFE proposed by Rosneft are expected to be co-funded from
the National Welfare Fund of Russia.
For the Russian oil and gas industry financial sanctions and their impact on corporate
funding pose a greater threat than low oil price. Fitch Ratings stress tests show Russia
can stand oil at $55 a barrel for several years2. But if restrictions to foreign funding stay
at place, companies may not be able to allocate enough investments to maintain steady
1
A. Novak. $80-90 a barrel is a fair price for oil / Rosbalt. 12.22.2014.
http://www.rosbalt.ru/main/2014/12/22/1351055.html
2
Sanctions a Bigger Threat to Russian Oil than Weak Prices / Fitch Ratings Moscow. 03.11.2015.
http://fitchratings.ru/rws/press-release.html?report_id=981102
- 54 -
levels of production. Sanctions eliminated access to Western capital markets for all
Russian oil and gas companies, and in this situation Russian banks can offer some
liquidity, but in doing it they rely on the limited capital of the governmental funds and
the Central Bank of Russia.
The sanctions prohibiting transfer of certain technologies and equipment to Russia are
unlikely to have a significant impact on near-term oil and gas production. But if it
persists, the prohibition will hurt oil production in the medium and long term.
The decline in oil prices undermines the viability of technically challenging, costly
projects and will weaken cash flows, which will contribute to the reduction in
investment. But a 40% depreciation of the Russian ruble has helped offset the impact by
reducing already low operation costs and capital expenditures.
To foresee future perspectives of the Russian oil and gas projects in Northeast Asia the
author analyzes current challenges for them at times of relatively low hydrocarbon
prices and other negative factors.
The Eastern Siberia - Pacific Ocean oil pipeline (ESPO) is a key project of Russia to
supply oil to the Northeast Asia. ESPO-1 is a section from Tayshet (Irkutsk Oblast) to
Skovorodino (Amur Oblast); ESPO-2 is a section from Skovorodino to Kozmino
(Primorsky Krai). Proven reserves of the oil fields of the Eastern Siberia and the RFE
are sufficient for successful operation of the pipeline for at least another 30 years at the
current level of supply. In 2014, oil supplies to China by an off-shoot from Skovorodino
to Dacin have reached 15 million tons. 24.9 million tons of oil was shipped through the
tanker port of Kozmino. Main importers of the oil from Kozmino were Japan (36%),
China (23.9%) and the South Korea (14.6%)1. It is expected that 30 million tons of oil
would be shipped to China (ESPO-1) and the other 50 million tons would go through
1
Kozmino exceeds the plan for the shipment of oil in 2014 / Transneft – Port Kozmino.
http://smnpk.transneft.ru/press/news/?id=17432
- 55 -
Kozmino (ESPO-2) per year by 20201. At the end point of the ESPO-2 pipeline, Rosneft
plans to construct a petrochemical complex with a capacity of up to 30 million tons,
however the project prospective may be reevaluated due to the current negative
economic conditions.
In sum, main capital expenditures for the ESPO were made during the construction
stage and decline in hydrocarbon prices will not reduce the already contracted volumes
of exports. However, if the prices remain at low level for long time, Russia may
postpone expanding pipeline capacity, until prices restore to a level of $80-90 a barrel.
Sakhalin projects are one of the major Russian infrastructural projects with foreign
investments. In 2013, Sakhalin has exported 12 million tons of oil. The main customers
of the Sakhalin oil are the South Korea (54.1%), Japan (28.7%) and China (17.2%).
Natural gas in the form of LNG is shipped from Russia’s only LNG terminal, which
was built under the Sakhalin-2 project at Prigorodnoye in the southern part of Sakhalin.
The volume of gas shipments remains stable: in 2013, it amounted for 9.5 million tons
of LNG. The main importing countries are Japan (79.9%), the South Korea (19%) and
China (1.1%)2.
Current international situation around Russia and low prices for hydrocarbons pose
some risks for the future of the Sakhalin projects. The EU and the US sanctions,
imposed in September 2014, ban exports of the goods and technologies that can be used
in deep water oil production projects on the Arctic shelf of Russia. If the sanctions are
not lifted, they would lead to a deterioration of the investment climate and, considering
the low oil prices, may impose limitations on the development of the Sakhalin projects.
Taking into account that Russia has no sufficient technologies, equipment, expertise and
the capital, successful large scale development of these projects is feasible only in close
cooperation with the foreign partners. Nonetheless considering the global depletion of
easy-to-recover hydrocarbon reserves, the role of offshore projects will continue to
1
ESPO system can be expanded up to 80 million tons after 2020 / Oil Transport. http://www.transportnefti.com/news/3402/
2
Foreign trade of the Sakhalin oblast / Official website of the Governor of the Sakhalin oblast.
04.04.2014. http://www.admsakhalin.ru/index.php?id=152
- 56 -
grow, and thus the long-term prospects of the Sakhalin projects should be assessed
positively.
Overall the Gazprom’s so called grand Eurasian strategy envisages gradual unification
of gas deposits at Western and Eastern Siberia into a joint resource system that will
make it more reliable and stable thus fully serving interests of domestic and foreign
customers. To achieve this strategic goal Gazprom is making main focus on
implementing three grand projects: The Power of Siberia, The Power of Siberia 2, and
Sakhalin projects (Sakhalin 2 and in perspective Sakhalin 3).
The Power of Siberia is a natural gas pipeline that is under construction now for
transportation of gas from the Eastern Siberia to Primorsky Krai with branch lines that
lead to China. Sino-Russian gas talks on this project continued for over 10 years and
ended successfully in 2014. Gas supplies from the Chayandinskoye gas field with
reserves of 1.2 trillion cubic meters in Yakutia will begin in 2018. The initial amount of
gas to be supplied is 38 bcm annually, while full capacity of the pipeline is planned at
60 bcm1. The gas contract provides $25 billion prepayment by CNPC for construction
of the pipeline; total investment volume is $55 billion2. Despite the decline in gas prices,
Gazprom keeps on intensive construction of the pipeline.
During the APEC summit in Beijing in November 2014, Russia and China signed a
Memorandum stipulating 30 bcm of annual gas supplies through the so called “Western
route” from deposits of the Western Siberia to Xinjiang in the Northwest of China.
According to the more detailed agreement signed in 2015, Gazprom will supply to
China 30 bcm of gas annually during 30 years (in fact the project has got a new name –
the Power of Siberia 2). Parallel implementation of the Power of Siberia projects will
make Russia the largest exporter of gas to China.
1
The Power of Siberia / Gazprom. http://www.gazprom.com/about/production/projects/pipelines/ykv/
M. Kotsubinskaya. Who wins from the Gas Deal of Russia and China / RBC. 05.21.2014.
http://top.rbc.ru/economics/21/05/2014/5424b232cbb20feba0485f4b
2
- 57 -
The third main component of Gazprom’s Eurasia strategy is advanced development of
Sakhalin LNG production projects. Current level of gas prices 1 , coupled with the
Western sanctions, make implementation of LNG projects very difficult, as they require
significant investments and sophisticated technologies. These factors may compel
Russia to suspend its new LNG projects in the RFE at least until 2020 (for example,
construction of the LNG plant in Primorsky Krai has been recently postponed for an
indefinite period).
The only exception is the existing Sakhalin LNG project expansion. At the SanktPetersburg economic forum in 2015 Gazprom and Shell signed a Memorandum on
construction of the third production line of the Sakhalin LNG plant. As a result its
capacity will increase for 5 million tons of LNG annually making its overall annual
production output equal to 15 million tons of LNG. Recently Gazprom and Shell (one of
the world leaders in LNG industry) signed an agreement on strategic cooperation. Shell
and Japanese companies are expected to provide technology and investments for this
project, while Japan, ROK and China may consume major part of its gas. Realization of
this project will allow Gazprom consolidate its position in the Asia-Pacific LNG market.
Rosneft also has a project to construct LNG plant in the framework of the Sakhalin
projects. Exxon Mobil, which is an operator of the Sakhalin-1, is interested in the LNG
project, because currently Exxon Mobil has to sell associated gas to Gazprom. However
to provide sufficient resource base for the LNG plant, Exxon Mobil should develop new
deep water oil and gas fields, and taking into account current geopolitical and economic
situation, the development of the new fields seems unlikely. That is why Rosneft Exxon Mobil LNG plant at Sakhalin so far is a very questionable project.
There are also discussions going on about possible construction of a gas pipelines from
the Sakhalin Island to Japan (mostly initiated by Japanese scholars) and from Primorsky
Krai to the South Korea via the North Korea. Gazprom considers a pipeline to Japan as
1
LNG prices at the Asia Pacific market are pegged to oil.
- 58 -
an impractical solution from both economic and technological standpoints. Instead of
the gas pipeline, Gazprom prefers to increase supply of LNG to Japan.
At the same time, Russia shows interest towards a gas pipeline project to the South
Korea, but it is associated with a number of security, political and other risks. For
Moscow the Trans-Korean gas pipeline is primarily a geopolitical project, which aims at
enhancing the role of Russia on the Korean Peninsula and implementing its plans for
economic integration to Northeast Asia.
Russia is interested in increased role of the Northeast Asia countries in investing into oil
and gas projects in the Eastern Siberia and the RFE, and in transferring modern
technology, but the terms of foreign companies’ participation in the Russian oil and gas
projects are often not very favorable to them.
Lately Moscow was not ready to give majority of the stakes to foreign companies in any
of its oil and gas projects. However, just recently in February, 2015 Deputy Prime
Minister A. Dvorkovich stated at the Krasnoyarsk Economic Forum that he did not see
any political obstacles to surrender shares of over 50% in strategic oil and gas deposits
of Russia to Chinese companies, except for projects on the continental shelf of Russia1.
This statement may indicate a significant change in the Kremlin's traditional approach
toward national control of oil and gas deposits2 due to negative impact of economic
sanctions and substantive drop in prices for oil and gas.
Recommendations and Conclusions
To become a more significant actor in the Northeast Asia’s energy supply, Russia builds
up oil & gas exports infrastructure in the region. These steps correspond well with the
energy demand of China, Japan and the South Korea. This process has not only regional
1
Dvorkovich doesn’t see political obstacles to surrender shares of over 50% in oil and gas deposits to
China / RIA Novosti. 02. 27. 2015. http://ria.ru/economy/20150227/1049908556.html
2
Sevastyanov S. The More Assertive and Pragmatic New Energy Policy in Putin’s Russia: Security
Implications for Northest Asia // East Asia: An International Quarterly, 2008. V. 25, # 1. PP.35-55
- 59 -
energy security dimension, but can become a real incentive for accelerated economic
integration in the Northeast Asia.
Moscow conducts consistent policy to diversify its energy exports and in this context
gradual increase of the Northeast Asia’s share in the Russia’s oil and gas exports is
logical and appropriate. Moscow tries to combine maintaining sovereign control over its
energy infrastructure in the Eastern Siberian and the RFE (so far making more visible
concessions to China) with attracting more foreign investment and technology.
In terms of economic and political benefits, the optimum strategy for Russia is a
combination of gas supplies to China through two Power of Siberia pipelines with
implementation of LNG projects. Realization of the Power of Siberia projects is a good
chance for Moscow to get rid of an excessive dependence on the European gas market
while construction of the gas pipelines to Japan and to ROK in the near future is
unlikely.
If oil prices remain in the range of $50-60 a barrel, oil exports to the Northeast Asia in
near term is unlikely to decrease. However Moscow expects that the price for oil would
soon come back to $80-90 a barrel. This price level is sufficient for Russia to steadily
operate current oil and gas projects, fully implement investments program into
developing new oil and gas fields, and constantly increase hydrocarbon exports.
- 60 -

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