2. Overview of the Cooperation and Major Schemes 2002. 10. Bok-Jae Lee Senior Research Fellow

3. VII. COOPERATION SCHEME V. MAJOR ISSUES IN NATURAL GAS CONTENTS CONTENTS I. POLICY INTERESTS OF NORTHEAST ASIAN COUNTRIES II. INTERESTS OF EACH COUNTRY IN COOPERATION III. POSSIBILITIES FOR COOPERATION VI. MAJOR ISSUES IN ELECTRICITY IV. MAJOR ISSUES IN OIL

4. Ⅰ. Policy Interests of NEACs 2. Russia 2. Russia Supply Security of Imported Energy Resources Supply Security of Imported Energy Resources Development of Clean Coal Technology Development of Clean Coal Technology Improvement of Energy Efficiency Improvement of Energy Efficiency Transportation of Western Energy Resources to Eastern Transportation of Western Energy Resources to Eastern Consuming Areas Consuming Areas Management for Efficient Development of Energy Resources Management for Efficient Development of Energy Resources Coordination of Energy Policy between Federal Government and Coordination of Energy Policy between Federal Government and Local governments Local governments R&D in Energy Efficiency and Environmental Protection R&D in Energy Efficiency and Environmental Protection 1. China 1. China

5. 4. North Korea 4. North Korea 3E: Energy, Environment, and Economy 3E: Energy, Environment, and Economy Implementation of Kyoto Protocol with Increasing Demand for Energy Implementation of Kyoto Protocol with Increasing Demand for Energy Supply Security of Energy Supply Security of Energy Liberalization of Energy Industries: Electricity and Gas Liberalization of Energy Industries: Electricity and Gas Self Sufficiency Self Sufficiency - maximum development of domestic energy resources: coal, - maximum development of domestic energy resources: coal, hydropower, renewable energy hydropower, renewable energy Introduction of Foreign Capital and Technology for Rehabilitation of Introduction of Foreign Capital and Technology for Rehabilitation of Energy Infrastructure Energy Infrastructure 3. Japan 3. Japan Ⅰ. Policy Interests of NEACs

6. 6. South Korea 6. South Korea Liberalization and Privatization of Energy Industries Liberalization and Privatization of Energy Industries Connecting Domestic Energy Supply Network to International Network Connecting Domestic Energy Supply Network to International Network Upgrade of Domestic Energy Standards to Global Level Upgrade of Domestic Energy Standards to Global Level Energy Supply Security Energy Supply Security Energy Demand Management Energy Demand Management Privatization and Deregulation of Energy Industries Privatization and Deregulation of Energy Industries Connection of Domestic Supply Network to the Continental Network Connection of Domestic Supply Network to the Continental Network Ⅰ. Policy Interests of NEACs 5. Mongolia 5. Mongolia

7. II. Interests of Each Country in Cooperation Russia – active in energy cooperation among Northeast Asian countries Russia – active in energy cooperation among Northeast Asian countries based on plenty of domestic energy resources based on plenty of domestic energy resources China – primarily interested in development of domestic energy resources China – primarily interested in development of domestic energy resources Japan – approaching with a long-term perspective Japan – approaching with a long-term perspective Mongolia–interested in the energy cooperation Mongolia–interested in the energy cooperation South Korea – active in energy cooperation in Northeast Asia South Korea – active in energy cooperation in Northeast Asia North Korea – interested in meeting domestic energy needs North Korea – interested in meeting domestic energy needs

8. III. Possibilities for Cooperation Cooperation in pursuit of mutual benefits Cooperation in pursuit of mutual benefits - energy producing country- demand security - energy producing country- demand security - energy consuming countries- supply security, diversification - energy consuming countries- supply security, diversification Similarity in policy interests among Northeast Asian countries Similarity in policy interests among Northeast Asian countries Complementary in energy supply-demand structure of Northeast Asian Complementary in energy supply-demand structure of Northeast Asian countries countries Geographical adjacency of Northeast Asian countries Geographical adjacency of Northeast Asian countries Recent favorable cooperation mood among Northeast Asian countries Recent favorable cooperation mood among Northeast Asian countries

9. IV. Major Issues in Oil Asian premium of Middle East crude oil prices Asian premium of Middle East crude oil prices - low demand elasticity for the crude - low demand elasticity for the crude - adequacy of marker crude - adequacy of marker crude Concerted response to energy supply disruption Concerted response to energy supply disruption - joint stockpiling program - joint stockpiling program - sharing SPR - sharing SPR Cooperation in crude oil importation Cooperation in crude oil importation - common utilization of excess stockpiling capacity - common utilization of excess stockpiling capacity - common purchase and transportation of crude oil - common purchase and transportation of crude oil - cooperation for security of ocean transportation route - cooperation for security of ocean transportation route

10. V. Major Issues in Natural Gas Construction of pipeline network Construction of pipeline network - major consuming countries to play key roles - major consuming countries to play key roles Governmental setup of cooperation Governmental setup of cooperation - investment security - investment security - unifying tax and pipeline tariff system - unifying tax and pipeline tariff system - pipeline operation rules - pipeline operation rules - supply security agreement - supply security agreement Joint study program Joint study program - information exchange - information exchange - technological cooperation - technological cooperation - promotion of mutual understanding - promotion of mutual understanding

11. VI. Major Issues in Electricity Role of each country Role of each country - Russia: a leading role based on plentiful energy resources - Russia: a leading role based on plentiful energy resources - Japan, South Korea: provider of technology and capital - Japan, South Korea: provider of technology and capital - China, Japan, Koreas, Mongolia: Consumers - China, Japan, Koreas, Mongolia: Consumers Basic approach for construction of electric network Basic approach for construction of electric network - local-regional-global - local-regional-global Governmental organization Governmental organization Joint study program Joint study program - sharing study results among experts - sharing study results among experts - building mutual trust - building mutual trust

12. VII. Cooperation Scheme Open regionalism Open regionalism Division of roles between government sector and private sector Division of roles between government sector and private sector - government to establish institutional arrangements - government to establish institutional arrangements - private sector to carry out projects - private sector to carry out projects Bilateral and multilateral cooperation in parallel Bilateral and multilateral cooperation in parallel - bilateral cooperation for small scale & short-run projects - bilateral cooperation for small scale & short-run projects - multilateral cooperation for large scale & long-run projects - multilateral cooperation for large scale & long-run projects Cooperation organization Cooperation organization - government officials forum - government officials forum - expert forum - expert forum - business forum - business forum - umbrella organization: ‘Council for Northeast Asia Energy Cooperation’ - umbrella organization: ‘Council for Northeast Asia Energy Cooperation’