A Slight Rise in
Energy Demand

Korea National Oil Corp. projects primary energy demand this year to rise 2.6 pct

Korea's primary energy demand this year is forecast to rise 2.6 percent year-on-year to 238.6 million TOE, compared to 1.8 percent rise or 232.7 million TOE during last year, the Korea National Oil Corp.(KNOC) said in its forecast released at the end of last year.
The forecast is predicated on the assumption that the economic growth would amount to 4.3 percent this year 0.7 percent lower than that of 2006 and the primary energy demand for this year will rise by 0.8 percentage points.
KNOC said its projection is based on a number of reasons: 1. Dubai oil prices in spot market are forecast to be stable at the level of $58 per barrel annually on average and thus, Korea's energy prices will be stable, which will boost domestic energy consumption. 2. Energy demand for heating in 2007 will be higher than that in 2006 average temperature in 2006 was relatively warmer compared with that in the past 20 years.
Key Energy Index: Since 2000,
Korea's energy intensity decreased continuously because of a prominent rise in low-energy consuming industries such as information & telecommunication industry more than large-energy consuming industries.
And thus, the energy intensity is expected to drop from 0.317 in 2005 to 0.308 in 2006 and to 0.302 in 2007. Korea's GDP elasticity has remained below 1 and particularly, it was expected to mark the lowest level of 0.36 in 2006. In 2007, the figure will increase to 0.60.
Oil Demand: In 2007, as the international oil prices will be stable, domestic oil demand will grow by 0.6 percent annually on average to 758 million barrels, similar level of 2006. In 2006, domestic oil demand was forecast to fall by 1 percent year-on-year to 753.7 million barrels owing to prolonged high oil prices, a slowdown in the international petrochemical industries and continuous fuel shift especially in the industry and residential & commercial sectors though the growth rate of the nation's economy will be lower than that of 2006.
Product, naphtha demand will lead to an increase in total oil consumption in 2007.
LNG Demand: In 2007, LNG demand is forecast to show a solid 8.1 percent rise compared with the previous year. As Korea's electricity demand is expected to increase in 2007, LNG demand for power generation will increase by 14 percent from a year earlier. And LNG demand for city gas use will rise by 3.4 percent year-on-year in 2007.
Coal: In 2007, Korea's coal demand is expected to go up by 4.9 percent year-on-year and the growth rate will be sluggish more than that of 2006.
Energy Demand by Energy Source:
Korea's oil dependence is likely to have decreased from 44.4 percent in 2005 to 43.1 percent in 2006 and 42.2 percent in 2007 owing to fuel change to other energy resources following a hike in oil prices and environmental regulations.
The share of energy demand is forecast to increase from 13.3 percent in 2005 to 14 percent in 2006 and 14.7 percent in 2007 because of a rise in LNG demand for power generation.
The share of coal demand is forecast to account for 24.6 percent in 2006 and 25.1 percent in 2007. Meanwhile, the share of nuclear demand will remain flat from 16 percent in 2006 and 15.6 percent in 2007.
Korea's final energy demand is expected to rise by 1.5 percent year-on-year owing to stable energy prices and a rise in demand for heating. By sector, energy demand in the industry sector in 2006 advanced by 1.6 percent year-on-year owing to sluggish naphtha demand following unfavorable petrochemical market conditions in spite of a rise in economic growth.
In 2007, energy demand in the industry sector will rise by 2 percent year-on-year despite economic slowdown.
In detail, electricity and city gas demand in the industry sector is forecast to expand by 4.5 percent and 3.9 percent from a year ago in 2007. nw

(photo right) President Hwang Doo-yul of the Korea National Oil Corp.
KNOC's offshore oil platform.