Keynote Speech
by
H.E. Cho Tae-yul
Vice Minister of Foreign Affairs
of the Republic of Korea
at the GASTECH VIP Program
March 23, 2014
Conrad Seoul Hotel

Honorable Ministers,
Vice Minister Han Jinhyun,
Mr. Mark Carr, President of DMG Energy Events,
Mr. Jang Seok-hyo, President and CEO of KOGAS,
Distinguished Guests,  
Ladies and Gentlemen,

I would like to welcome all of you to the GASTECH VIP program which is organized taking advantage of the GASTECH 2014. I am especially grateful to those of you who have travelled all the way to Seoul to participate in this meaningful event.

My special thanks also go to the distinguished Ministers from the Republic of Croatia, Republic of Equatorial Guinea, The Independent State of Papua New Guinea, and the State of Qatar for gracing this event with their presence.

Let me also express my sincere appreciation to DMG Energy Events and KOGAS for their hard work and dedication in successfully organizing this important event.

The Republic of Korea is proud to host the GASTECH 2014, one of the world’s most prestigious events in the field of natural gas, attracting this year more than 400 global energy companies and 15,000 energy experts from around the world.

Today’s event, GASTECH VIP program, is designed to offer an invaluable platform for government and business leaders to engage in meaningful dialogues and shape policies on energy security and development, focused on natural gas. As top energy VIPs from across the globe are gathered here today, I am confident that discussions at this meeting will be not only informative, but very much insightful as well.

It is also worth noting that this is the first GASTECH event to be hosted by a country in Asia. This illustrates that Asia is emerging as a central player in the global energy market.

Distinguished Guests,

Natural gas is a major source of power generation in the global energy market. It is technically and financially low-risk, while producing relatively less carbon than other fossil fuels.

As a result, natural gas is often considered to be a realistic energy source to meet the growing energy demand, especially given the public’s increasingly negative attitude towards nuclear power following the Fukushima accident. Natural gas is also expected to play a bridging role between fossil fuels and renewable energy. 

Natural gas accounts for 24 percent of primary energy consumption in the world, and the demand for gas is expected to continue to grow rapidly. IEA is forecasting that the global gas demand will increase by an average of two percent every year, compared with the 1.2 percent growth per annum of total energy demand.

IEA also predicts that the global gas demand will overtake that of coal before 2030 and come close to that of oil around 2035. Indeed, we are entering into the ‘Golden Age of Gas’ as was described by IEA.

Apparently, a paradigm has shifted in the global gas market in recent years. Let me point out just two fundamental changes that have brought about such a paradigm shift. 

First, vast unconventional gas resources and increased global capacity in liquefied natural gas (LNG) have altered the supply side, thereby challenging the traditional gas suppliers.

Shale gas, among others, has emerged as a game changer in the global energy market, turning the U.S. into a net energy exporter. China does not produce shale gas at this moment, but is known to have the world’s largest shale gas reserves.

According to IEA, approximately 40 percent of the increase in global gas production between now and 2035 is expected to come from unconventional gas exploration.

In addition, new discoveries in East Africa and Australia have helped spur the rise of global LNG volume. Doubling its gas production, Australia is expected to be the world’s biggest LNG exporter by 2020. The East African countries such as Mozambique and Tanzania are emerging as hot spots for natural gas development due to their massive gas reserves.

With the rise of Australia, East Africa and potentially the United States as gas exporters, the balance between PNG and LNG will change and shift more towards LNG in the future.

Second, as suppliers are diversified, sellers are looking for different markets especially in Asia where gas demand is huge. 

The Asian natural gas market is the fastest growing gas market worldwide, and is expected to become the second largest by 2015. The Asian market accounts for nearly two-thirds of the global LNG demand. In fact, Japan and Korea are number one and second largest LNG importers, respectively. China also plans to use more gas to resolve its serious air pollution caused by the massive use of coal.

However, Asian gas importers have been paying higher gas prices than those in other parts of the world, as the market has been dominated by long-term oil indexed contracts with rigid regulations.

In 2012, natural gas prices in the United Sates remained relatively low, while gas prices in Asia were five times higher than that in the United States. Therefore, the debate continues over the development of alternative pricing mechanisms. On top of this, whereas Europe has several gas trading hubs, similar developments have yet to take place in Asia.

It was against this backdrop that IEA has pointed to the need for a regional gas trading hub where prices reflect more accurately the local supply and demand fundamentals, while facilitating intra-regional gas trade.

We had a focused discussion on this issue this morning with the participation of representatives from countries in Northeast Asia including China, Japan, Korea, Russia, and the U.S., as well as IEA. I believe that this issue deserves further discussions at this meeting as well as the GASTECH 2014.

Distinguished Guests,

Energy is a prerequisite for the sustainable development of human society. To secure a stable gas supply, stakeholders including exporting and importing countries need to cooperate more closely.

As an old saying goes, "none of us is as smart as all of us." Indeed, there is a need for collective efforts and wisdom for a prosperous energy future.

I sincerely hope that we will greatly benefit from constructive and insightful discussions at the VIP program today and GASTECH 2014 that will follow and at the end of the day, get a clearer view on how effectively we can work together to secure sustainable development and enhance our energy security.

Thank you very much. /END/