Korea Energy Demand Outlook · ISSN 1599-9009 June 2011 7PMVNF /P KEEI Korea Energy Demand Outlook...

KEEI

KEEI

KE

EI

Korea Energy Demand Outlook

ISSN 1599-9009

KoreaEnergy

Dem

andO

utlook June 2011

June2011

Volume 13, No. 2QUARTERLY ENERGY OUTLOOK

Korea Energy Economic Institute132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do

Phone: (031)420-2114

Fax: (031)422-4958

E-mail : [email protected]

Hompage : http://www.keei.re.kr

Korea

Energy

Econom

icInstitute

에너지수요전망 문13-2 2011.9.16 2:11 PM 페이지1 매일3 MAC2PDF_IN 600DPI 175LPI T

수요전망 내지13-2 문 2011.9.16 2:11 PM 페이지148 매일3 MAC2PDF_IN 600DPI 125LPI T

ISSN 1599-9009

June 2011

Volume 13, No. 2

KEEIKorea Energy Demand Outlook


·In charge of overall research Choi, Do-young ([email protected])

·Oil/International oil market Kim, Soo-il ([email protected])

·Electricity/Transformation Choi, Do-young ([email protected])

·Town gas/Coal Lee, Sang-youl ([email protected])

·International LNG market Lee, Bo-hye ([email protected])

·Material/Research support Hwang, In-wook ([email protected])

·Statistical support Chung, Chang-bong ([email protected])

Phone: +82-31-420-2148, +82-31-420-2234

Fax: +82-31-420-2164

KEEI Korea Energy Demand Outlook

The 「KEEI Korea Energy Demand Outlook」is a report that analyzes trends in theinternational energy market and energy supply/demand trends in Korea, and makesshort-term forecasts on energy demand.

This report quickly identifies recent changes in energy supply and demand, thusproviding various energy supply/demand forecast indexes and information forgovernment policies. It is intended to contribute to government efforts in setting andadjusting an overall policy direction regarding energy supply and demand.

This report was written and edited by the Energy Demand and Supply ForecastTeam under the Center for Energy Information and Statistics of KEEI.


Summary ………………………………………………………………………………………… 7

Ⅰ. International Energy Market Trends…………………………………………………… 35

1. Trends in the international oil market and oil exports/imports ……………………… 37

2. Trends in the international natural gas market ……………………………………… 40

3. Trends in the international coal market ……………………………………………… 42

Ⅱ. Economic and Energy Consumption Trends in Korea …………………………… 45

1. Economic trends in Korea ……………………………………………………………… 47

2. Trends in primary energy consumption ……………………………………………… 51

3. Trends in final energy consumption …………………………………………………… 66

4. Trends in petroleum product consumption…………………………………………… 73

5. Trends in electricity consumption ……………………………………………………… 79

6. Trends in LNG and town gas consumption ………………………………………… 85

7. Trends in coal and other energy consumption ……………………………………… 89

Ⅲ. Energy Demand Outlook for 2011 …………………………………………………… 95

1. Outlook on the international energy market ………………………………………… 97

2. Domestic economic outlook and outlook assumptions…………………………… 103

3. Outlook on primary energy demand ………………………………………………… 108

4. Outlook on final energy demand……………………………………………………… 116

5. Outlook on petroleum product demand …………………………………………… 122

6. Outlook on electricity demand………………………………………………………… 124

7. Outlook on LNG and town gas demand …………………………………………… 129

8. Outlook on coal and other energy demand ………………………………………… 131

9. Characteristics and implications……………………………………………………… 136

Contents

3http://www.keei.re.kr

Summary

Table of Contents for Titles



4 KOREA ENERGY ECONOMICS INSTITUTE

<TableⅠ-1> Changes in international crude oil prices ……………………………………………… 37<TableⅠ-2> Changes in consumer prices of petroleum products in Korea ……………………… 38<TableⅠ-3> Trends in international natural gas supply and demand ……………………………… 40<TableⅠ-4> Trends in international natural gas prices ……………………………………………… 41<TableⅠ-5> Trends in global coal production ………………………………………………………… 44

<TableⅡ-1> Recent economic trends ………………………………………………………………… 48<TableⅡ-2> Composite index…………………………………………………………………………… 50<TableⅡ-3> Primary energy consumption trends …………………………………………………… 53<TableⅡ-4> Level of contribution of each factor that led to a rise in primary energy consumption in 2010 ………… 58<TableⅡ-5> Level of contribution of each factor that led to a rise in primary energy consumption in the first quarter of 2011… 60<TableⅡ-6> Temperature effect on increase in primary energy consumption …………………… 62<TableⅡ-7> Trends in final energy consumption……………………………………………………… 66<TableⅡ-8> Trends in petroleum product consumption by sector ………………………………… 74<TableⅡ-9> Trends in key petroleum product consumption ……………………………………… 75<TableⅡ-10> Trends in electricity consumption ……………………………………………………… 80<TableⅡ-11> Expansion of plant capacity by source in 2010 ……………………………………… 84<TableⅡ-12> Trends in LNG consumption …………………………………………………………… 85<TableⅡ-13> Trends in town gas consumption ……………………………………………………… 87<TableⅡ-14> Pig iron production, shipment, and inventory, and bituminous coal consumption for steel making…… 91<TableⅡ-15> Trends in coal consumption …………………………………………………………… 92<TableⅡ-16> Trends in consumption of thermal energy, new & renewable energy, and other energy ……… 93

<TableⅢ-1> IEA’s global oil consumption figures and forecasts …………………………………… 97<TableⅢ-2> Oil price outlook for 2010 and 2011 (Dubai oil)………………………………………… 98<TableⅢ-3> Oil price outlook of major overseas organizations in March ………………………… 98<TableⅢ-4> International natural gas consumption and outlook …………………………………… 99<TableⅢ-5> International natural gas production and outlook …………………………………… 100<TableⅢ-6> Outlook on international natural gas prices …………………………………………… 101<TableⅢ-7> Outlook on international coal prices for 2011 ………………………………………… 103<TableⅢ-8> Economic outlook for 2011 …………………………………………………………… 105<TableⅢ-9> Economic outlook by major organizations in Korea ………………………………… 107<TableⅢ-10> Assumptions on temperature variables ……………………………………………… 107<TableⅢ-11> Outlook on primary energy demand ………………………………………………… 109

Table of Contents for Tables


SummaryContents


<TableⅢ-12> Key indices related to energy consumption ………………………………………… 111<TableⅢ-13> Outlook on final energy demand……………………………………………………… 117<TableⅢ-14> Outlook on petroleum product demand by sector ………………………………… 122<TableⅢ-15> Outlook on demand for key petroleum products…………………………………… 123<TableⅢ-16> Outlook on electricity demand………………………………………………………… 124<TableⅢ-17> Trends in GDP elasticity of electricity demand ……………………………………… 125<TableⅢ-18> Outlook on LNG demand……………………………………………………………… 129<TableⅢ-19> Outlook on town gas demand………………………………………………………… 130<TableⅢ-20> Outlook on steel production…………………………………………………………… 132<TableⅢ-21> Outlook on coal demand ……………………………………………………………… 133<TableⅢ-22> Outlook on thermal energy, new & renewable energy, and other energy demand…… 135<TableⅢ-23> Outlook on energy intensity …………………………………………………………… 139<TableⅢ-24> Assumed changes in energy consumption caused by the temperature effect … 140<TableⅢ-25> Energy consumption and import and outlook ……………………………………… 144

[DiagramⅠ-1] Changes in petroleum product import prices and consumer prices ……………… 39[DiagramⅠ-2] Trends in international natural gas prices……………………………………………… 41[DiagramⅠ-3] International coal price trends…………………………………………………………… 42

[DiagramⅡ-1] Composite index ………………………………………………………………………… 50[DiagramⅡ-2] Recent economic and primary energy consumption trends ……………………… 52[DiagramⅡ-3] Trends in Dubai oil prices ……………………………………………………………… 54[DiagramⅡ-4] Trends in consumer prices of oil for transport………………………………………… 55[DiagramⅡ-5] Trends in primary energy consumption increase rate ……………………………… 56[DiagramⅡ-6] Level of contribution to increase in primary energy consumption by each factor in 2010 ………………… 59[DiagramⅡ-7] Level of contribution to increase in primary energy consumption by each factor in the first quarter of 2011 … 60[DiagramⅡ-8] Level of contribution of each factor towards annual primary energy increase since 2005 ………………… 61[DiagramⅡ-9] Assumed changes in primary energy consumption caused by the temperature effect …… 62[DiagramⅡ-10] Changes in HDD ……………………………………………………………………… 63[DiagramⅡ-11] Changes in CDD ……………………………………………………………………… 63[DiagramⅡ-12] Level of contribution of each energy source to primary energy increase in 2010 ………………… 64[DiagramⅡ-13] Level of contribution of each energy source to primary energy increase in the first quarter of 2011 … 65[DiagramⅡ-14] Final energy consumption by energy source and use……………………………… 67

Table of Contents for Diagrams




[DiagramⅡ-15] Business trends in the manufacturing industry and changes in electricity consumption for industrial use … 68[DiagramⅡ-16] Trends in the rate of final energy consumption increase by sector ……………… 70[DiagramⅡ-17] Changes in petroleum product consumption increase rate by sector ………… 74[DiagramⅡ-18] Changes in gasoline consumption and increase rate ……………………………… 76[DiagramⅡ-19] Changes in consumption of diesel for transport and increase rate ……………… 76[DiagramⅡ-20] Changes in consumption of kerosene and diesel, and increase rate …………… 77[DiagramⅡ-21] Changes in consumption of heavy oil and increase rate ………………………… 77[DiagramⅡ-22] Changes in consumption of naphtha and increase rate…………………………… 78[DiagramⅡ-23] Changes in LPG consumption and increase rate ………………………………… 78[DiagramⅡ-24] Recent manufacturing business trends and electricity consumption for industrial use…… 81[DiagramⅡ-25] Rate of increase in industrial activity indexes and electricity consumption for

industrial use (First quarter of 2009 - First quarter of 2011) ……………………… 82[DiagramⅡ-26] Share of electricity consumption in the manufacturing industry by

business types in 2010 (%) …………………………………………………………… 83[DiagramⅡ-27] Changes in the electricity consumption increase rate……………………………… 84[DiagramⅡ-28] Trends in LNG consumption increase rate per use………………………………… 86[DiagramⅡ-29] Trends in town gas consumption by month………………………………………… 88[DiagramⅡ-30] Trends in number of customers of town gas for industrial use …………………… 89[DiagramⅡ-31] Changes in the rate of increase in pig iron and bituminous coal for steel making…… 90

[DiagramⅢ-1] Outlook on international natural gas prices ………………………………………… 101[DiagramⅢ-2] Changes in CDD and HDD and assumptions for outlook ………………………… 108[DiagramⅢ-3] Forecasts on the economic growth rate and primary energy increase rate …… 110[DiagramⅢ-4] Forecasts on energy intensity and per capita consumption ……………………… 112[DiagramⅢ-5] Share of primary energy demand taken up by each energy source …………… 114[DiagramⅢ-6] Forecasts on level of contribution of each energy source to increase in primary energy … 115[DiagramⅢ-7] Share of final energy demand occupied by each sector ………………………… 120[DiagramⅢ-8] Share of final energy demand taken up by each energy source ………………… 121[DiagramⅢ-9] Outlook on economic growth rate and electricity demand increase rate ……… 126[DiagramⅢ-10] Outlook on electricity demand by sector…………………………………………… 126[DiagramⅢ-11] Trends in electricity consumption share of each sector and forecasts ………… 127[DiagramⅢ-12] Town gas trends and outlook by use ……………………………………………… 131[DiagramⅢ-13] Coal trends and forecasts per use ………………………………………………… 134[DiagramⅢ-14] Thermal energy trends and outlook ………………………………………………… 135[DiagramⅢ-15] Trends and outlook on new & renewable energy and other energy …………… 136[DiagramⅢ-16] Level of contribution of each factor towards a rise in primary energy consumption in the first quarter … 138[DiagramⅢ-17] Changes in share of winter peak demand taken up by heating load…………… 141[DiagramⅢ-18] Trends in oil dependence and forecasts…………………………………………… 143


Summary


Primary energy consumption for the first quarter of 2011 tentatively reached 71.5

million TOE, a year-on-year rise of 3.7%.

Quarterly energy consumption generally maintained a higher level of growth than the

economic growth rate from the second quarter of 2009 through the fourth quarter of

2010. However, it posted a lower level of increase than the economic growth rate

(4.2%) in the first quarter of 2011.

Favorable conditions in the economy continued in 2011 and there was also the

record-breaking cold wave in January in 48 years (5.4℃ drop from average month

temperature), triggering factors that would increase energy consumption. However,

primary energy consumption recorded a relatively low level of increase in the first

quarter.

Energy consumption trends

Summary▶

[Recent economic and primary energy consumption trends]


Notes: 1) Values in parentheses refer to the year-on-year growth rate; p refers to tentative figures2) LNG consumption includes the estimated directly-adopted and consumed volume of POSCO and K-POWER

Consumption trends by energy source

Coal consumption recorded a year-on-year rise of 10.3% in 2010, and a year-on-

year reduction of 0.8% in the first quarter of 2011.

- Coal consumption led a rise in primary energy consumption in the first half of 2010.

However, the rate of increase in coal consumption slowed down in the second half

of the year. Consumption slightly went down in the first quarter of 2011.

Oil consumption recorded sound growth of 2.1% in 2010 and 3.1% in the first



Category2009 2010p 2011p

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Coal 25.0 25.1 29.2 29.2 108.4 30.7 27.7 30.1 31.0 119.5 30.4 (Million ton) (-0.3) (-0.1) (7.3) (8.6) (4.0) (22.9) (10.6) (3.3) (6.3) (10.3) (-0.8)

-Excluding 20.4 20.3 23.6 23.3 87.6 23.3 21.6 24.3 24.9 94.1 24.2coking coal (6.2) (5.6) (10.9) (11.6) (8.7) (14.2) (6.2) (3.0) (6.8) (7.4) (3.8)

Oil 199.1 192.5 183.6 203.2 778.5 198.8 193.5 192.1 210.1 794.5 205.0(Million bbl) (-2.8) (5.3) (0.4) (6.9) (2.3) (-0.1) (0.5) (4.6) (3.4) (2.1) (3.1)

-Excluding 117.7 122.4 104.7 121.0 455.9 117.7 111.3 109.1 124.7 462.8 116.3naphtha (-3.6) (4.9) (1.1) (3.9) (1.5) (0.0) (-1.0) (4.2) (3.1) (1.5) (-1.2)

LNG 8.5 4.6 4.6 8.4 26.1 10.7 6.5 5.5 9.4 32.0 12.0 (Million ton) (-14.7) (-11.8) (-2.0) (11.0) (-4.9) (25.0) (39.8) (20.2) (11.8) (22.6) (12.7)

Hydro 0.8 1.4 2.5 0.9 5.6 1.2 1.6 2.3 1.5 6.6 1.5(TWh) (-12.3) (9.1) (4.8) (-4.2) (1.4) (48.0) (10.5) (-7.9) (66.5) (16.4) (21.4)

Nuclear power 36.6 37.3 37.2 36.6 147.8 36.0 36.5 37.6 37.8 147.8 36.0 (TWh) (-8.2) (3.1) (-0.8) (-1.9) (-2.1) (-1.6) (-2.3) (0.9) (3.2) (0.0) (0.0)

Other 1.3 1.3 1.3 1.6 5.5 1.4 1.4 1.3 1.6 5.7 1.5(Million TOE) (8.5) (6.6) (5.6) (1.9) (5.4) (3.7) (3.7) (3.7) (3.7) (3.7) (10.8)

Primary energy 62.5 56.9 58.2 65.7 243.3 68.9 61.0 61.3 69.5 260.8 71.5(Million TOE) (-5.1) (1.3) (2.0) (6.5) (1.1) (10.3) (7.3) (5.3) (5.8) (7.2) (3.7)

Primary energy 48.9 43.3 44.2 51.1 187.5 53.4 46.2 46.6 54.3 200.5 55.8

-Excluding for raw (-4.5) (2.2) (3.4) (6.2) (1.7) (9.2) (6.7) (5.4) (6.3) (7.0) (4.4)materials

<Primary energy consumption trends>


quarter of 2011.

- Oil consumption maintained a level similar to that reached in the previous year in the

first half of 2010. However, oil consumption indicated relatively high growth since

the second half of the year, owing to a substantial increase in consumption of oil for

industrial raw materials and transport fuel, in addition to a sharp rise in consumption

in the transformation (power generation) sector.

In 2010, natural gas (LNG) consumption witnessed a year-on-year rise of 22.6%,

followed by two-digit growth (12.7%) in the first quarter of 2011.

- Favorable conditions in the economy continued in the first quarter of 2011. This,

and the record-breaking cold wave led to a substantial rise in natural gas

consumption mainly for power generation.

The level of nuclear power generation in 2010 was similar to that recorded in 2009. In

the first quarter of 2011, the same level as the same period the previous year was

maintained.

- The level of power generation went down compared to the same period the

previous year owing to planned inspection of major facilities in January and

February 2011. However, it went up 8.6% in March, a result of operation of Singori

Nuclear Power Plant Unit 11).

Level of contribution of each factor that led to a year-on-year rise in primary energy

consumption in the first quarter of 2011

The economic growth effect contributed 107.9% (2.8 million TOE) to a rise in primary

energy consumption.

- This means that primary energy consumption would have increased by 2.8 million

TOE in the first quarter of 2011 as a result of the economic growth (4.2%) effect, if

there were no changes in other factors that trigger a change in consumption such

as temperature and energy efficiency.


Summary

1) Korea’s 21st nuclear power plant; Commercial operation commenced on February 28, 2011


The temperature effect contributed 74.8% (1.9 million TOE) to a rise in primary energy

consumption.

- The average temperature in the first quarter dropped 1.2℃ compared to the same

period the previous year, including the record-breaking cold wave in 48 years that took

place in January 2011. Energy demand for heating increased because of the weather.

It is presumed that consumption went down 2.1 million TOE as a result of changes in

other factors such as energy efficiency improvements, a rise in oil prices, and

changes in industrial structure.

Notes: The energy efficiency effect includes all factors that trigger a change in energy consumption excluding thetemperature effect and economic growth effect such as changes in the industrial structure and energy prices andtechnical energy efficiency improvements.

Level of contribution of each final energy source to a rise in primary energy


The level of contribution of electricity (triggering energy consumption for power generation)

and energy for industrial raw materials (naphtha and coking coal) stood at 55.6% and

6.8%, respectively. The level of contribution of energy for industrial raw materials sharply

dropped compared to 2010 as a result of decreased consumption of coking coal (-15.1%).

The level of contribution of town gas, a key source of energy for heating, reached

20.6% in the first quarter owing to influence from the cold weather. In contrast, the level

of contribution of petroleum for fuel stood at -7.0% owing to decreased consumption.



Category

Level of contribution toincrease in primaryenergy consumption

(%)

Contribution to a rise in consumption byeach factor in the first quarter of 2011

Contribution to change inconsumption (1,000 TOE)

Level of contribution (%)

Energy efficiency effect -2,121 -82.7 -3.1

Growth effect 2,768 107.9 4.0

Temperature effect 1,918 74.8 2.8

Change in primary energy 2,565 100.0 3.7

<Level of contribution of each factor that led to a rise in primary energy consumption in the first quarter of 2011>


Final energy consumption in the first quarter of 2011 recorded 53.8 million TOE, a

year-on-year increase of 2.8%.

In the first quarter of 2011, there was an even level of increase in energy

consumption of around 3% among different sectors. The transport sector and

industrial sector recorded a year-on-year increase of 3.2% and 2.8%, respectively,

thus posting a relatively high consumption increase rate.

The rate of increase in energy consumption in the residential/commercial sector and

public/other sector both posted a year-on-year rise of 2.7%. Consumption in the

residential/commercial and public/other sectors, in which energy consumption for

heating purposes takes up a high proportion, indicated a low increase rate. This

seems to be partly a result of influence of energy-saving policies such as the

‘measure on placing restrictions on heating temperatures in buildings’that was

implemented in response to a soar in oil prices.

- Consumption in the industrial sector indicated high growth of 7.9% from the

previous year in 2010. In the first quarter of 2011, however, the level of increase

slowed down to a year-on-year increase of 2.8%, attributable to base effects and

sluggish coking coal consumption.


Summary

[Level of contribution of each energy source to primary energy increase in the first quarter of 2011]


The slowdown in consumption for industrial use resulted from a considerable drop in

coal (-6.2%) consumption, despite a soar in electricity (11.0%) and town gas (9.1%)

consumption.

Notes: Values in parentheses are the year-on-year growth rate (%); p refers to tentative figures




1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Industry 25.4 26.1 26.6 28.0 106.1 28.9 28.3 27.6 29.7 114.5 29.7(Million TOE) (-6.1) (-1.3) (0.2) (6.1) (-0.3) (13.8) (8.5) (3.8) (5.9) (7.9) (2.8)-Excluding for 11.8 12.5 12.6 13.4 50.3 13.4 13.5 12.9 14.5 54.3 14.0raw materials (-4.9) (-1.1) (2.8) (4.8) (0.4) (13.3) (7.8) (2.6) (8.0) (7.9) (4.6)

Transport 8.5 9.1 9.1 9.3 35.9 8.5 9.2 9.5 9.6 36.8 8.8(Million TOE) (-2.9) (0.8) (2.3) (1.3) (0.4) (0.8) (1.9) (4.2) (2.8) (2.4) (3.2)

Residential 12.7 7.0 5.8 10.3 35.7 13.6 7.8 6.2 10.6 38.3 14.0/commercial(Million TOE) (-8.2) (0.9) (1.2) (5.1) (-1.4) (7.7) (12.3) (6.0) (3.4) (7.1) (2.7)

Public/other 1.1 1.0 1.0 1.2 4.3 1.2 1.0 1.1 1.2 4.6 1.2(Million TOE) (-0.5) (11.9) (5.9) (3.6) (4.8) (5.4) (1.8) (11.0) (3.3) (5.2) (2.7)

Total 47.7 43.1 42.5 48.7 182.1 52.3 46.4 44.3 51.1 194.1 53.8(Million TOE) (-6.0) (-0.3) (0.9) (4.9) (-0.3) (9.7) (7.6) (4.4) (4.7) (6.6) (2.8)

Total 34.1 29.5 28.5 34.1 126.3 36.8 31.5 29.6 35.9 133.9 38.1-Excluding for (-5.5) (0.3) (2.4) (3.8) (0.0) (7.8) (6.8) (4.1) (5.0) (6.0) (3.5)raw materials

Town gas 6.9 3.6 2.7 5.3 18.4 7.9 4.3 2.8 5.7 20.8 8.1(Billion m3) (-6.1) (-1.1) (-2.5) (5.4) (-1.5) (14.5) (20.9) (6.1) (7.8) (12.6) (2.8)

Oil 187.2 186.1 181.0 197.9 752.2 189.0 187.8 187.0 204.2 768.0 194.7(Million bbl) (-4.9) (3.6) (1.0) (6.8) (1.5) (1.0) (0.9) (3.3) (3.2) (2.1) (3.0)-Excluding 105.8 106.0 102.1 115.7 429.6 107.9 105.7 104.0 118.7 436.3 106.0naphtha (-7.2) (2.1) (2.2) (3.5) (0.0) (1.9) (-0.3) (1.9) (2.6) (1.6) (-1.8)

Electricity 100.3 94.0 99.0 101.2 394.5 112.5 103.6 109.1 109.0 434.2 121.4(TWh) (-2.3) (2.0) (2.7) (7.7) (2.4) (12.2) (10.3) (10.2) (7.7) (10.1) (7.9)

Coal 8.2 8.2 9.5 10.0 35.9 11.3 10.2 9.4 10.4 41.2 10.6(Million ton) (-15.4) (-16.4) (-0.5) (-3.3) (-8.9) (37.0) (24.1) (-1.2) (3.9) (14.7) (-5.5)-Excluding 3.7 3.4 3.9 4.2 15.2 3.9 4.0 3.5 4.3 15.8 4.4coking coal (-7.5) (-11.5) (8.6) (-5.6) (-4.3) (6.5) (17.1) (-9.1) (3.3) (4.0) (12.6)

Thermal and 1,870 1,391 1,223 1,933 6,418 2,001 1,486 1,269 2,009 6,765 2,173other (1.5) (1.7) (1.9) (4.6) (2.5) (7.0) (6.8) (3.7) (3.9) (5.4) (8.6)(Thousand TOE)

<Trends in final energy consumption>


In the 2000s, the transport sector indicated a stable increase in consumption. It

indicated a year-on-year rise of 2.4% in 2010, attributable to an upswing in gasoline

and jet oil consumption, and maintained sound growth of 3.2% in the first quarter of

2011.

In the first quarter of 2011, consumption in the residential/commercial sector

recorded a relatively gradual increase rate of 2.7% despite the emergence of factors

that would have triggered a rise in energy consumption as a result of abnormally low

temperatures (average temperature indicated a year-on-year drop of -1.2℃ and HDD

recorded a year-on-year rise of 6.9%).

Trends in final energy consumption by energy source in the first quarter of 2011

Electricity consumption sharply rose from a continued upswing in industrial activities

and the cold wave.

- Electricity, town gas, and oil consumption went up 7.9%, 2.8%, and 3.0%,

respectively, but coal consumption indicated a year-on-year drop of 5.5% owing to

decreased consumption of bituminous coal for steel making.

- In terms of oil, naphtha consumption rose 9.3% as a result of favorable conditions

in production in the petrochemical industry. On the other hand, consumption of

other products indicated relatively low growth such as gasoline (2.7%), kerosene

(5.3%), and diesel (1.7%).

- Consumption of town gas for industrial use rose 9.1%, thus leading a rise in overall

town gas consumption. Consumption for residential/commercial use recorded a

gradual increase of 1.1%.

- Despite the fact that bituminous coal consumption for steel making posted a year-

on-year rise of 5.6% and 10.9%, respectively, in February and March, coal

consumption recorded a year-on-year drop of 5.5% owing to a sharp decrease

(-40.5%) in January.

- Electricity consumption indicated a year-on-year rise of 7.9% because consumption

for industrial use remained to be strong (year-on-year rise of 11.0%).

- Electricity consumption for industrial use continued two-digit growth for four


Summary


consecutive months from October 2010 through February 2011, attributable to an

upswing in production activities in industries that consume a great amount of

electricity (machinery and equipment, chemical products, automobiles, steel

making, etc.). It also recorded relatively high growth of 8.1% in March.

Primary energy demand in 2011 is expected to reach 269.9 million TOE, a year-on-

year rise of 3.5%.

The level of increase in primary energy demand is forecast to slow down this year

due to several factors: a decrease in the economic growth rate (6.2% in 2010 →

4.2% in 2011), removal of temperature effects resulting from an assumption that

average year temperatures will be recovered from the second through the fourth

quarter, and base effects from high growth in consumption in 2010.

Primary energy demand in 2011, excluding energy for raw material use (naphtha,

coking coal), is expected to go up a mere 3.4% from the previous year.

- In 2011, energy demand for raw material use will likely go up 3.9%, indicating

relatively quick growth.

- Favorable conditions in the oil and chemical industries are expected to continue,

resulting in forecasts that naphtha consumption for raw material use will rise by

5.7%. Consumption of coking coal is expected to become stagnant with the

reflection of base effects from a high rise in consumption recorded in the previous

year.



Outlook on primary energy demand



Summary

[Forecasts on the economic growth rate and primary energy increase rate]


Notes: 1) Values in parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to estimates2) LNG consumption includes the estimated directly-adopted volume of POSCO and K-POWER

Forecasts on key energy indicators

The energy intensity (TOE/million won) deteriorated from 0.246 in 2008 to 0.248 in

2009 and 0.250 in 2010. However, it will likely improve to 0.248 in 2011.



Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Coal 30.7 27.7 30.1 31.0 119.5 30.4 28.1 30.6 31.7 120.9(Million ton) (22.9) (10.6) (3.3) (6.3) (10.3) (-0.8) (1.5) (1.6) (2.3) (1.1)

-Excluding 23.3 21.6 24.3 24.9 94.1 24.2 21.8 24.4 25.1 95.6coking coal (14.2) (6.2) (3.0) (6.8) (7.4) (3.8) (1.3) (0.3) (0.9) (1.6)

Oil 198.8 193.5 192.1 210.1 794.5 205.0 196.2 193.7 212.0 806.8(Million bbl) (-0.1) (0.5) (4.6) (3.4) (2.1) (3.1) (1.4) (0.8) (0.9) (1.5)

-Excluding 117.7 111.3 109.1 124.7 462.8 116.3 109.6 107.1 123.6 456.6naphtha (0.0) (-1.0) (4.2) (3.1) (1.5) (-1.2) (-1.6) (-1.8) (-0.9) (-1.4)

LNG 10.7 6.5 5.5 9.4 32.0 12.0 7.1 6.0 10.1 35.3(Million ton) (25.0) (39.8) (20.2) (11.8) (22.6) (12.7) (10.1) (10.2) (7.7) (10.3)

Hydro 1.2 1.6 2.3 1.5 6.6 1.5 1.6 2.5 1.5 7.1(TWh) (48.0) (10.5) (-7.9) (66.5) (16.4) (21.4) (1.2) (8.4) (5.2) (8.4)

Nuclear power 36.0 36.5 37.6 37.8 147.8 36.0 38.1 40.7 40.7 155.5(TWh) (-1.6) (-2.3) (0.9) (3.2) (0.0) (0.0) (4.4) (8.5) (7.8) (5.2)

Other 1.4 1.4 1.3 1.6 5.7 1.5 1.5 1.4 1.8 6.1(Million TOE) (3.7) (3.7) (3.7) (3.7) (3.7) (10.8) (6.1) (6.1) (8.0) (7.8)

Primary energy 68.9 61.0 61.3 69.5 260.8 71.5 63.0 63.4 71.9 269.9(Million TOE) (10.3) (7.3) (5.3) (5.8) (7.2) (3.7) (3.2) (3.4) (3.5) (3.5)

Primary energy 53.4 46.2 46.6 54.3 200.5 55.8 47.5 48.0 56.0 207.3-Excludingfor raw (9.2) (6.7) (5.4) (6.3) (7.0) (4.4) (2.7) (2.9) (3.2) (3.4)materials

<Outlook on primary energy demand>


Notes: p refers to tentative figures; e refers to forecasts

Forecasts on primary energy demand by energy source

In 2011, coal demand is expected to show gradual growth of 1.1%, attributable to a

slowdown in coal consumption for power generation (no new facilities), sluggishness

in the cement industry, and base effects from a high increase in coking coal

consumption in the previous year.

In 2011, oil demand is expected to reach 806.8 million barrels, a year-on-year rise of

1.5%, owing to a rise in oil demand for industrial use as a result of the economic

recovery, despite continued high oil prices.


Summary

Category 2005 2006 2007 2008 2009 2010p 2011e

Economic growth rate (%) 4.0 5.2 5.1 2.3 0.3 6.2 4.2

Primary energy consumption 3.8 2.1 1.3 1.8 1.1 7.2 3.5increase rate (%)

Energy intensity (TOE/Million won) 0.264 0.256 0.247 0.246 0.248 0.250 0.248

Per capita consumption (TOE) 4.75 4.83 4.88 4.95 4.99 5.34 5.51

<Key indices related to energy consumption>

[Forecasts on energy intensity and per capita consumption]


- Oil demand for industrial use is expected to indicate relatively high growth (2.1%) as

a result of increased consumption for raw material use, but the level of increase is

expected to decrease in comparison to 2010 owing to a decrease in demand for

heating purposes2).

- An increase in demand (5.7%) for naphtha, which accounts for 41.7% of total oil

consumption (as of 2010), is expected to lead an increase in total oil consumption

in 2011.

In 2011, LNG demand will likely record high growth of 10.3% compared to the

previous year. LNG demand for power generation, which accounted for 44% of

overall consumption in 2010, is expected to rise 16.0%, thus leading an overall

increase in LNG demand.

- Demand for LNG for power generation, which is used to handle peak load, is

forecast to record relatively high growth as it is expected that there will be

restrictions on the expansion of capacity of base-load power generation facilities

such as those for nuclear energy and bituminous coal and a high rise in electricity

demand.

The amount of nuclear power generation is forecast to record a year-on-year rise of

5.2% as new facilities are planned for operation in 2011, the first after 2005.

- There will likely be a rate of increase in the low 5% range as a result of effects of

facility expansion (approximately 5.5% increase is assumed)3) from the operation of

Singori Units 1 and 2.

Forecasts on level of contribution made by each final energy source to primary energy

demand

The level of contribution made by electricity, which triggers energy consumption for



2) This results from assuming average year temperatures.3) The total facility capacity of Singori Units 1 and 2 is 2,000MW, which accounts for 11.3% of the nuclear power

plant capacity (17,716MW) recorded at the end of 2010. However, completion of construction of Singori Unit 2is scheduled for the end of December 2011. Production of electricity through actual pilot operations will likelybe possible in the second half of the year.


power generation, is forecast to rise from 46.3% in 2010 to around 54.6% in 2011.

The level of contribution of demand for industrial raw material use is expected to

slightly drop from 26.0% in 2010 to 25.5% in 2011 as a result of a slowdown in

coking coal consumption.

It is forecast that town gas demand for industrial use and heating will slow down

based on the assumption that there will be a slowdown in economic growth and

average year temperatures will be recovered. The level of contribution of town gas to

an increase in primary energy demand is forecast to decrease from 15.7% in 2010 to

14.3% in 2011.

Petroleum products for fuel, excluding naphtha, are expected to record a decrease in

consumption (-1.3%) in 2011, thus contributing to reducing primary energy demand

by 8.4%.


Summary

[Forecasts on level of contribution of each energy source to increase in primary energy]


Final energy demand is forecast to record a year-on-year increase of 3.1% in 2011 to

reach 200.2 million TOE.

Consumption soared in the industrial sector and residential/commercial/public sector

in 2010, but the level of consumption increase is expected to substantially slow down

in 2011 due to base effects. The transport sector will likely indicate an increase rate

similar to the previous year.

In 2011, demand in the industrial sector is expected to record sound growth of 3.9%

despite base effects from a substantial rise in consumption in 2010.

Energy demand in the transport sector is expected to mark an increase rate of 2.3%,

which is similar to the previous year, attributable to a rise in new car sales and

overseas traveling, a result of continued economic recovery, and an increase in

demand for international freight transport, despite high oil prices.

The residential/commercial/public sector will likely indicate a substantial slowdown in

the demand increase rate at 1.8% in 2011. This is because of base effects as it is

assumed that average year temperatures will be recovered as well as a slowdown in

the level of increase in income levels.



Outlook on final energy demand


Notes: Values in parentheses are the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts


Summary

Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Industry 28.9 28.3 27.6 29.7 114.5 29.7 29.5 28.7 31.0 119.0(Million TOE) (13.8) (8.5) (3.8) (5.9) (7.9) (2.8) (4.2) (4.0) (4.6) (3.9)

-Excluding for 13.4 13.5 12.9 14.5 54.3 14.0 14.0 13.3 15.1 56.4raw materials (13.3) (7.8) (2.6) (8.0) (7.9) (4.6) (3.7) (2.8) (4.6) (4.0)

Transport 8.5 9.2 9.5 9.6 36.8 8.8 9.4 9.7 9.8 37.6(Million TOE) (0.8) (1.9) (4.2) (2.8) (2.4) (3.2) (1.9) (2.0) (2.1) (2.3)

Residential/commercial 14.9 8.8 7.3 11.8 42.8 15.3 8.9 7.4 11.9 43.5/public

(Million TOE) (7.5) (11.0) (6.7) (3.4) (6.9) (2.7) (0.9) (2.6) (0.7) (1.8)

Total 52.3 46.4 44.3 51.1 194.1 53.8 47.8 45.8 52.7 200.2Million TOE (9.7) (7.6) (4.4) (4.7) (6.6) (2.8) (3.1) (3.3) (3.2) (3.1)

Total 36.8 31.5 29.6 35.9 133.9 38.1 32.3 30.4 36.8 137.6-Excluding for (7.8) (6.8) (4.1) (5.0) (6.0) (3.5) (2.4) (2.5) (2.6) (2.8)raw materials

Town gas 7.9 4.3 2.8 5.7 20.8 8.1 4.5 3.1 5.9 21.7(Billion m3) (14.5) (20.9) (6.1) (7.8) (12.6) (2.8) (4.6) (9.5) (4.4) (4.5)

Oil 189.0 187.8 187.0 204.2 768.0 194.7 190.4 188.6 206.0 779.6(Million bbl) (1.0) (0.9) (3.3) (3.2) (2.1) (3.0) (1.3) (0.9) (0.9) (1.5)


Electricity 112.5 103.6 109.1 109.0 434.2 121.4 110.6 114.8 115.4 462.2(TWh) (12.2) (10.3) (10.2) (7.7) (10.1) (7.9) (6.7) (5.3) (5.9) (6.5)

Coal 11.3 10.2 9.4 10.4 41.2 10.6 10.4 9.8 11.0 41.9(Million ton) (37.0) (24.1) (-1.2) (3.9) (14.7) (-5.5) (2.1) (5.1) (5.7) (1.6)

--Excluding 3.9 4.0 3.5 4.3 15.8 4.4 4.1 3.6 4.4 16.6coking coal (6.5) (17.1) (-9.1) (3.3) (4.0) (12.6) (1.7) (2.1) (2.7) (4.8)

Thermal and 2,001 1,486 1,269 2,009 6,765 2,173 1,609 1,390 2,192 7,364other

(Thousand TOE) (7.0) (6.8) (3.7) (3.9) (5.4) (8.6) (8.3) (9.5) (9.1) (8.9)

<Outlook on final energy demand>


In terms of each energy source, most energy sources will likely post a lower

consumption increase rate in 2011 compared to the previous year due to a slowdown

in economic growth and base effects from the assumption that average year climate

conditions will be recovered.

Town gas consumption went up 12.6% in 2010, owing to a surge in demand for

industrial use resulting from economic recovery and abnormally low temperatures.

However, the level of increase is expected to slow down to 4.5% in 2011.

In 2011, oil consumption for industrial raw material use is expected to lead a rise in oil

demand.

- Oil demand for raw material use, including naphtha, solvent, and asphalt, is

expected to indicate a year-on-year rise of 2.1% owing to continued favorable

conditions in the economy and a rise in domestic ethylene production as a result of

influence from the Japanese earthquake.

Electricity will likely indicate relatively high growth of 6.5% in 2011 resulting from

several factors: continued, sound economic growth, relatively low charge, continued

dissemination of equipment that use electricity, and convenience in use.

In 2011, coal consumption in the final sector is forecast to see an increase of 1.6%

owing to forecasts of decreased demand for cement production as well as a

slowdown in bituminous coal demand for steel making as a result of base effects.

Thermal energy is forecast to witness a slowdown in the consumption increase rate

at 4.5% in 2011. New & renewable energy is expected to post an increase rate of

approximately 10%, thanks to the government’s active implementation of

propagation policies.




In the first quarter of 2011, primary energy consumption recorded a level of growth

that was lower than the economic growth rate due to influence from a soar in

international oil prices and the implementation of energy-saving policies.

From the second quarter of 2009 through the fourth quarter of 2010, quarterly

primary energy consumption continued a level of growth that was higher than the

economic growth rate. In the first quarter of 2011, however, it recorded a level of

increase that was lower than the economic growth rate (4.2%) at 3.7%.

Primary energy consumption indicated a relatively low increase rate in the first quarter

of 2011 despite continued favorable conditions in the economy as well as a cold

wave. The average temperature in January (-7.2℃) was as much as 5.4℃ lower than

average month temperatures.

* A 10.5% increase in industrial activity (mining/manufacturing industry production

index) in the first quarter: (Year 2010) 129.8 → (Year 2011) 143.3

* A 6.9% increase in HDD in the first quarter: (Year 2010) 1,588 → (Year 2011) 1,696

This seems to be partly attributable to a sudden rise in international oil prices and the

resulting execution of energy-saving policies such as the ‘measure on placing

restrictions on heating temperatures in buildings’.

* Dubai oil price: (December 2010) $88.95/bbl → (March 2011) $108.53/bbl (22.0%↑)

- The ‘measure on placing restrictions on heating temperatures in buildings’was

carried out for four weeks (January 24-February 18, 2011), targeting 441 large

buildings, in response to high oil prices as well as record-breaking peak demand.

All target buildings maintained appropriate heating temperature levels.

- Results of an analysis on the level of contribution made by each factor towards a

rise in primary energy consumption in the first quarter of 2011 lead to the

assumption that the government’s implementation of energy-saving policies and a

rise in oil prices, excluding economic growth and temperature effects, resulted in

energy consumption-reducing effects of 2.1 million TOE.


Summary

Key characteristics


Notes: The energy efficiency effect includes all factors that trigger a change in energy consumption excluding thetemperature effect and economic growth effect such as changes in the industrial structure and energy pricesas well as technical energy efficiency improvements.

Forecasts on energy intensity improvements in 2011

Energy intensity (TOE/million won) deteriorated in 2009 and 2010, but is expected to

improve to 0.248 in 2011.

- The worsened energy intensity of 2009 resulted from a 1.1% rise in primary energy

consumption, triggered by favorable conditions in production activities in industries

that consume great amounts of energy, against the backdrop of a substantial

slowdown in the economic growth rate (0.3%) due to the financial crisis.

- The worsened energy intensity of 2010 resulted from a soar in energy demand for

heating and cooling purposes, a result of abnormal climate conditions (abnormally

low temperatures in the winter and high temperature and humidity levels in the

summer), an increase in the number of steel facilities (Hyundai Steel and Dongkuk

Steel), and an increase in industrial activities owing to the economic recovery.

The worsened energy intensity in 2009 and 2010 seems to be temporary amid mid-

to long-term energy efficiency improvements.



[Level of contribution of each factor towards a rise in primary energy consumption in the first quarter of 2011]


Notes: p refers to tentative figures, e refers to forecasts

Continued rapid increase in electricity consumption

Electricity maintained a rapid increase in consumption due to several factors: low

charge; continued favorable conditions in industries that consume a great amount of

electricity; and diversification, increased size, and propagation of electric equipments.

- Electricity consumption indicated annual average growth of 9.8% in the 1990s, and

continued an annual average increase of 6.1% in the 2000s, the highest among key

final energy sources.

- Even in 2008 and 2009, when the final energy consumption increase rate stood at

a mere 0.6% and -0.3%, respectively, electricity consumption recorded relatively

high growth of 4.5% and 2.4%, respectively.

- Electricity consumption indicated two-digit growth (10.1%) in 2010, attributable to

the economic recovery and temperature effects. It is forecast to record high growth

of 6.5% in 2011 as well.

The rapid increase in consumption of electricity has expanded the level of

contribution made by electricity (triggering input of energy for power generation)

towards a rise in primary energy consumption.

- The level of contribution of electricity towards a rise in primary energy is forecast to

go up from 46.3% in 2010 to around 54.6% in 2011.

Electricity is expected to continue to perform leading roles in Korea’s energy demand

for the time being as a result of increased value added of core manufacturing industry

products, which consume great amounts of electricity, and changes in lifestyles

triggered by technological development.


Summary

Category 2005 2006 2007 2008 2009 2010p 2011e



<Outlook on energy intensity>


Energy demand increasingly sensitive to temperature changes

It has been assessed that temperature changes had a substantial influence on

primary energy consumption in the 2000s. In particular, the climate factor served to

substantially raise energy consumption in 2005 and 2010.

- This is because energy consumption now flexibly responds to temperature changes

in tandem with increased dissemination and use of cooling and heating equipment,

a result of economic growth and abnormal climate conditions that have frequently

occurred in the 2000s.

Of peak demand in the summer and winter, demand for cooling and heating

purposes is taking up a higher percentage, according to analysis results (Korea

Power Exchange). This supports the fact that energy demand is becoming sensitive

to temperature changes.

- The share of peak load taken up by electricity used for heating purposes is

assumed at more than 25% at peak demand last winter (December 2010-February

2011).

Source: Press release by the Korea Power Exchange (Results of analysis of winter peak demand from 2010 to 2011),March 7, 2011



[Changes in share of winter peak demand taken up by heating load]


It is forecast that peak demand (74,770MW) this summer (June-August 2011) will

record a year-on-year rise of 7.0%4), of which demand for cooling will likely reach

17,290MW, accounting for 23.1% of total electricity demand.

- Electricity demand for cooling is expected to indicate a year-on-year increase of

12.3% at peak load in the summer of 2011. It is thus forecast to increase much

rapidly than the average rate of increase in electricity demand.

As such, it is becoming increasingly important to come up with policies on stabilizing

energy supply and demand, such as measures on electricity demand side

management in preparation for peak demand in the summer and winter.

It is forecast that oil dependence regarding primary energy consumption will decrease.

The share of oil reached its peak at 63% in 1994 and continued to decrease

afterwards. It stood at 40.0% in 2010 and is expected to further drop to 39.3% in

2011.

- The primary energy share taken up by naphtha, which is mainly used for industrial

raw materials, reached 16.3% in 2010, higher than LNG (15.9%) and nuclear

energy (12.9%). It is forecast to go up to 16.6% in 2011 as a result of an upswing in

the petrochemical industry.

- When excluding naphtha, the share of primary energy taken up by oil is expected to

decrease from 23.7% in 2010 to 22.7% in 2011. The share of primary energy

occupied by oil, excluding naphtha, is lower than that of coal (28.6%) and is almost

at the LNG (17.0%) level.

Considering Korea’s industrial structure, where the level of contribution of the

petrochemical industrial to the economy is high, the nation’s oil dependence target

should be set targeting petroleum products for fuel, excluding for industrial raw

material use (naphtha, asphalt, etc.).


Summary

4) Refer to press release of the Ministry of Knowledge Economy (“Full launch of an emergency measure teamon electricity supply/demand this summer”, June 20, 2011)


In 2011, the value of energy imports is expected to reach a record-breaking 164.1

billion dollars, a year-on-year rise of 34.9%.

In 2010, the value of imported energy (oil, natural gas, coal, uranium) stood at 121.7

billion dollars, a year-on-year increase of 33.4%.

- The amount of energy imports (oil, natural gas, coal) indicated a year-on-year

increase of 8.8%, but the value of imports rose substantially owing to a surge in

energy prices such as international oil prices.

The value of energy imports in 2011 is estimated to reach a record-breaking 164.1

billion dollars.

- The level of increase in energy demand (imports) is expected to slow down this

year, but the value of energy imports is expected to indicate a year-on-year rise of

34.9%, owing to continued increase in international energy prices.



[Trends in oil dependence and forecasts]

Policy implications


* Oil: (’09) $66.6 billion → (’10) $90.9 billion → (’11) $126.3 billion

* LNG: (’09) $13.9 billion → (’10) $17 billion → (’11) $22.8 billion

* Bituminous coal: (’09) $9 billion → (’10) $11.4 billion → (’11) $13.4 billion

Notes: 1. Values in parentheses are the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts

There is a need to strengthen measures on stabilizing LNG supply and demand in

2011.

LNG consumption rose 22.6% in 2010 as a result of an increase in demand for

power generation. It is expected to mark high growth of 10.3% in 2011 as well.

* Rate of increase in consumption for power generation: (’09) -13.2% → (’10) 38.3%

→ (’11) 16.0%

* Rate of increase in consumption for town gas: (’09) 0.9% → (’10) 12.6% → (’11)

5.6%

- The increase in LNG demand for power generation, which is used to handle peak

load, is a result of a rise in electricity demand and limited construction of base-load


Summary

Category 2006 2007 2008 2009 2010p 2011e

Primary energy 233.4 236.5 240.8 243.3 260.8 269.9consumption

(Million TOE) (2.1) (1.3) (1.8) (1.1) (7.2) (3.5)

Amount of imports 238.7 246.8 255.5 257.1 279.6 285.2(Million TOE) (4.5) (3.4) (3.5) (0.6) (8.8) (2.0)

Unit cost (CIF)

- Oil ($/barrel) 62.8 69.3 98.3 60.8 78.7 103.4(24.4) (10.4) (41.7) (-38.2) (29.6) (31.3)

- LNG ($/ton) 472.2 494.9 726.6 537.3 521.6 640.0(21.9) (4.8) (46.8) (-26.1) (-2.9) (22.7)

- Bituminous 69.3 75.6 130.6 100.3 107.7 125.0coal ($/ton) (-4.2) (9.1) (72.8) (-23.2) (7.4) (16.1)

Value of imports 856 950 1,415 912 1,217 1,641(100 million dollars) (28.3) (11.0) (49.0) (-35.6) (33.4) (34.9)

<Energy consumption and import and outlook>


power generation facilities (nuclear power, bituminous coal).

* Base-load power facility increase rate (as of the end of the year): (’09) 1.2% →

(’10) 2.5% → (’11) 2.4%

* Electricity demand increase rate: (’09) 2.4% → (’10) 10.1% → (’11) 6.5%

- In addition to LNG demand for power generation, LNG demand for town gas also

soars in case of a cold wave. As such, there is a need for thorough reviews and

measures to achieve stability in LNG supply and demand in the winter.

- There is also a possibility of a sharp rise in LNG demand to replace nuclear power

generation in Japan from the second half of the year, making it increasingly

important to draw up measures on stabilizing supply and demand in the winter.

There is a need to strengthen electricity demand management and boost efficiency in

use of electricity.

There are various restraints on the expansion of power generation facilities needed to

satisfy electricity demand. As such, there is a need to concentrate on electricity

demand management policies at the national level.

What is important is the smooth implementation of the load management system that

was adopted at the end of 2010.

- There is a need to take timely measures against mid-week changes in

supply/demand conditions that result from abnormal weather through flexible

operation5) of the ‘weekly forecast demand adjustment’system, which is a load

management charge system.

- To enhance effectiveness of load management, there is a need to expand the

target of load management from the previous industrial sector (steel making,

cement, etc.) to the service industry. There is also a need to extend the load

management period and expand targets, leading to the need for additional



5) Previously, a notice on one-time execution was made on the Friday the week earlier. By makingimprovements to the system, the first notice is now made on the Friday the week before, followed by asecond notice during the week in consideration of changes in conditions.


budgetary support.

- There is also a need to encourage the maintenance of appropriate cooling and

heating temperatures in large buildings, where energy is excessively consumed, by

spreading information on how to use energy efficiently.

There is a need to adjust the electricity charge to a realistic level so as to reduce

excessive consumption (especially for heating purposes) of electricity.

- Large shopping malls, financial institutes, and other organizations in the service

industry tend to provide excessive heating and cooling in Korea.

- To remove such practices that lead to the waste of resources, there is an urgent

need to strengthen the market functions of energy prices.


Summary


Energy Demand Outlook for 2011


ChapterⅠInternational Energy

Market Trends

1. Trends in the international oil market and oil exports/imports

2. Trends in the international natural gas market

3. Trends in the international coal market


A. Trends in international oil prices and domestic petroleum product prices

International oil prices sharply rose after the second half of 2010 and reached the

highest level since 2008 in April 2011. However, the death of Osama bin Laden,

concerns of decreased oil demand as a result of concerns over a global economic

downturn, and the strong dollar led to international oil prices recording a 6.7% drop

from the previous month to stand at $108.4/barrel (Dubai oil).

International petroleum product prices slightly went down in tandem with a decrease

in international crude oil prices. The price of gasoline stood at (92RON) $109.6/barrel,

while that of diesel recorded $117.5/barrel and naphtha $97.9/barrel.

Notes: Values in parentheses indicate the year-on-year increase rate (%)

ChapterⅠ International Energy Market Trends


Trends in the international oil market and oil exports/imports1

(Unit: $/Bbl, %)

Category WTI Brent Dubai

Year 2008 99.92 (27.21) 97.47 (24.85) 94.29 (25.86)

Year 2009 61.94 (-37.98) 61.73 (-35.74) 61.92 (-32.37)

Year 2010 79.49 (17.55) 79.66 (17.93) 78.13 (16.21)

January 2011 89.54 (14.30) 96.78 (26.69) 92.55 (20.59)

February 2011 89.66 (17.28) 103.90 (40.75) 100.24 (36.20)

March 2011 102.97 (26.73) 114.64 (45.21) 108.53 (40.33)

April 2011 109.96 (30.13) 123.26 (45.17) 115.76 (38.40)

May 2011 101.29 (37.42) 114.27 (51.91) 108.04 (40.60)

<TableⅠ-1> Changes in international crude oil prices


B. Trends in petroleum product prices in Korea

In May 2011, consumer prices of gasoline and diesel in Korea recorded a year-on-year

increase of 11.9% and 16.5%, respectively. Consumer prices of butane for vehicles

went up 12.0%.

The prices of diesel and butane recorded relatively rapid growth. The relative price of

diesel and butane for vehicles against gasoline was around 91.5% and 55.1%,

respectively.

Notes: Values in parentheses indicate the relative price against gasoline prices (%)

Consumer prices of petroleum products in Korea are roughly 2.4 times (gasoline) and

2.0 times (diesel) higher than prices in the Singapore spot market around two weeks

earlier.



(Unit: Won/liter, Won/kg, %)

Category Gasoline Diesel Butane for transport

Year 2008 1,692.14 1,614.44 (95.4) 1,009.04 (59.6)

Year 2009 1,600.72 1,397.47 (87.3) 828.70 (51.8)

Year 2010 1,710.41 1,502.80 (87.9) 952.16 (55.7)

January 2011 1,825.40 1,621.70 (88.8) 1,183.80 (58.5)

February 2011 1,850.00 1,651.70 (89.3) 1,214.10 (57.8)

March 2011 1,939.00 1,755.90 (90.6) 1,296.20 (55.1)

April 2011 1,951.20 1,792.80 (91.9) 1,357.50 (54.8)

May 2011 1,938.50 1,772.90 (91.5) 1,369.60 (55.1)

<TableⅠ-2> Changes in consumer prices of petroleum products in Korea


Notes: Gasoline (92RON) and diesel (0.05%) prices were calculated by using the weekly average price of the Singaporespot market and the weekly average exchange rate

C. Trends in crude oil and petroleum product exports/imports

In March 2011, the crude oil import volume stood at 80.1 million barrels, recording a

year-on-year rise of 19.8%. The import value (based on CIF) rose 62.5% to reach 8.41

billion dollars.

The import volume for the first quarter of 2011 posted 235.1 million barrels, a year-on-year

rise of 13.3%, while the value posted a rise of 43.4% to stand at 22.96 billion dollars.

Crude oil imports maintained a high level of increase compared to the same period

the previous year, attributable to a soar in petroleum product exports and a rise in

production activities resulting from a favorable turn in the economy.

From January through March 2011, petroleum product imports recorded a year-on-

year increase of 0.1% to post 73.6 million barrels. In contrast, petroleum product

exports witnessed a year-on-year rise of 25.9% to reach 90.0 million barrels.

Imports of naphtha and heavy oil went down, triggered by a rise in domestic

production. In contrast, LPG imports went up. Overall, petroleum product imports



[DiagramⅠ-1] Changes in petroleum product import prices and consumer prices


remained at a level similar to that recorded in the same period the previous year.

Exports substantially rose as a result of improvements in the refining margin and

petroleum product support for the Japanese earthquake.

A. Trends in supply and demand

International natural gas demand, which went down in 2009 due to the economic

downturn, turned into an upward trend in 2010 to record 3,170.6 billion ㎥, a 4.9% rise

from the previous year.

The relatively low price and increased industrial demand in OECD countries and

emerging countries have led a rise in natural gas consumption.

International natural gas production, which went down 3.1% in 2009, rose 4.8% in

2010 from the previous year to post 3,159.6 billion m3.

Various factors have led to an increase in the international natural gas production

volume: Russia’s recovery of production power, a rise in unconventional gas

production in the US, and increased LNG production in Qatar.

Notes: Values in parentheses indicate the year-on-year growth rate (%)Source: EIU, World commodity forecasts: Industrial raw materials, June 2011



Trends in the international natural gas market2

(Unit: Billion m3)

Category Consumption Production

Year 2008 3,140.8 (3.1) 3,112.6 (4.1)

Year 2009 3,023.2 (-3.7) 3,014.9 (-3.1)

Year 2010 3,170.6 (4.9) 3,159.6 (4.8)

<TableⅠ-3> Trends in international natural gas supply and demand


B. Price trends

In 2010, international natural gas prices (prices at which natural gas was imported by

Japan) reached US$ 10.85/mBtu, a year-on-year rise of 21.4%. It went up to US$

12.05/mBtu in the first quarter of 2011.

The worsened nuclear power plant incident in Japan contributed to a rise in

international LNG prices, including LNG prices in Europe. However, it did not

influence the US to a great extent as the US is able to internally obtain natural gas

thanks to shale gas development.

Notes: Natural gas prices for the US are based on Henry Hub, while prices for Europe (excluding the UK) are based onimport border prices. Prices for Japan are LNG import prices.

Source: EIU, World commodity forecasts: Industrial raw materials, June 2011

Notes: Natural gas prices for the US are based on Henry Hub, while prices for Europe (excluding the UK) are basedon import border prices.

Source: EIU, World commodity forecasts: Industrial raw materials, May 2010-June 2011



(Unit: US$/mBtu)

CategoryYear 2010 Year 2011

1/4 2/4 3/4 4/4 Annual 1/4

US 5.15 4.32 4.28 3.80 4.39 4.18

Europe 8.84 7.51 8.26 8.54 8.29 9.45

Japan 10.32 10.95 11.22 10.91 10.85 12.05

<TableⅠ-4> Trends in international natural gas prices

[DiagramⅠ-2] Trends in international natural gas prices


International coal prices have been continuing an upward trend since March 2009,

owing to a rise in demand resulting from the global economic recovery. Last winter,

international coal prices remained strong, resulting from localized heavy rain in coal

exporting countries and an abnormal cold wave in the northern hemisphere.

What mainly led the rise in prices is demand in emerging countries in Asia such as

China and India.

- China shifted into a pure importer of steam coal in 2009, and imported 82 million

tons (net import of 65.6 million tons) in 2010. The country has become the world’s

No. 2 steam coal importer, following Japan (Platts, May 2011).

- India is also recording a continuous rise in imports, although the rise is not as sharp

as China. The country imported 45 million tons in 2010 (World’s No. 5 importer).

Total imports in Asia (1 million tons): (’08) 392.3 ⇒ (’09) 428.0 ⇒ (’10) 451.5

Source: Datastream (IMF Primary Commodity Price)



Trends in the international coal market6)3

6) For this chapter, information provided in the ‘International Steam Coal Price Trends and Outlook’section ofthe 「Global Energy Market Insight (Volume 11-12)」was extracted and organized.

[DiagramⅠ-3] International coal price trends


The rise in prices at the end of 2010 and in January 2011 is mainly attributable to

heavy rainfall in exporting countries.

- La Nina caused localized heavy rain in major coal exporting countries - Australia,

Indonesia, Republic of South Africa, and Venezuela. This led to issues in production

and shipment.

- The abnormal cold wave in the northern hemisphere is further aggravating coal

supply/demand conditions. Strengthened export control by the Indonesian

government and a rise in freight rates in the Republic of South Africa also

contributed to the rise in prices.

Spot prices in Asia are becoming stabilized after reaching their peak in January 2011.

- This is a result of improvements in supply/demand conditions, attributable to the

recovery of coal production and transport facilities, a rise in temperatures, and

stoppage of a coal power plant because of the Great East Japan Earthquake.

The Great East Japan Earthquake in March led to the stoppage of a 7,650MW coal

power plant, triggering a drop in the spot prices of steam coal.

- Spot prices of steam coal in Australia went down around 10 dollars/ton in the week

following the earthquake, compared to the week of the earthquake.

- In the mid-term future, steam coal demand will likely go up as a result of

improvements in the level of use of existing power plants, but this will likely have a

limited influence on the international coal market.




Notes: Values in parentheses indicate the year-on-year growth rateSource: EIU, World commodity forecast: Industrial raw materials, June 2011



(Unit: 1,000 tons)

Category 2008 2009 2010

China 2,800 3,050 3,575

US 1,063 973 983

India 516 555 560

Australia 398 399 415

Russia 325 298 314

Indonesia 274 302 324

Global total 6,808 6,967 7,612(5.9) (2.3) (9.3)

<TableⅠ-5> Trends in global coal production


ChapterⅡEconomic and Energy

Consumption Trends in Korea

1. Economic trends in Korea

2. Trends in primary energy consumption

3. Trends in final energy consumption

4. Trends in petroleum product consumption

5. Trends in electricity consumption

6. Trends in LNG and town gas consumption

7. Trends in coal and other energy consumption


Outline

According to Industrial Activity Trends announced by Statistics Korea in April 2011,

the mining/manufacturing industry, retail sales, facility investments, and completed

construction went down from the same month the previous year in April. Service

production indicated year-on-year growth. The cyclical component of coincident

index and composite leading index went down from the previous month in terms of a

comparison to the same month the previous year.

Production trends

Mining/manufacturing industry production went up 6.9% from the same month the

previous year, thanks to favorable conditions in semiconductors and parts (20.6%)

and in the automobile industry (8.5%), resulting in an upward trend for 22

consecutive months. This is despite a slump in image/sound/communication

equipment (-18.2%) and electric equipment (-5.7%).

The average operating rate in the manufacturing sector dropped 2.0%p from the

previous month to stand at 80.5%.

In terms of the service industry, there was a decrease in real estate/lease (-16.1%),

education (-0.1%), etc., but a rise in finance/insurance (9.1%), business facilities

management/business support (7.4%), health and social welfare (4.5%), etc. led to

an overall increase of 3.1% from the same month the previous year.

Consumption trends

Retail sales witnessed a year-on-year rise of 5.0% owing to a rise in sales of durables (15.7%)

including computers, telecommunication equipment, and passenger cars, and quasi-

durables (7.2%) such as clothes, despite a drop in nondurables (-1.7%) such as car fuel.

ChapterⅡ Economic and Energy Consumption Trends in Korea


Economic trends in Korea7)1

7) Summary of Industry Activity Trends (April 2011) of Statistics Korea


Source: Statistics Korea, Industrial Activity Trends (April 2011), May 2011 The Bank of Korea, Economic Statistics System (Price index)



(Unit: Compared to the same period (month) last year, %)

CategoryYear 2010 Year 2011

Annual 1/4 4/4 April 1/4p February Marchp Aprilp

Production

Consumption

Investment

Prices

Sales of consumer goods(compared to the same

month (period))

Consumer prices

Producer prices

Mining/manu

facturingindustry

Production(Compared tosame month(period))

(Automobiles)

Shipment

·Exports

Inventory

Average operating rate

Productioncapacity

Facility investmentindex

Domestic ordersfor machinery

Constructioncompleted in Korea

Construction orders in Korea

·Domesticdemand

·Manufacturingsector( I C T )

Manufacturingindustry

Facility

Construction

16.2

16.7

25.2

23.1

14.4

11.5

18.2

17.4

81.2

7.2

6.6

25.1

11.2

-3.3

-18.7

2.9

3.8

25.4

26.6

45.9

48.8

20.9

19.5

22.7

7.5

80.4

6.2

9.7

30.0

10.3

3.4

-1.6

2.7

2.6

11.7

12.0

15.2

10.2

11.9

8.3

16.9

17.4

80.8

7.4

5.1

13.6

11.3

-4.3

-40.2

3.6

5.0

19.5

20.1

31.0

35.0

16.5

15.5

18.0

12.5

81.7

6.6

7.3

32.5

27.2

-5.7

-14.1

2.6

3.2

10.6

10.8

14.3

16.1

11.9

7.2

18.4

10.3

83.2

6.8

5.1

6.6

19.5

-12.7

-12.8

4.5

6.7

9.0

9.3

17.7

12.8

10.2

5.9

16.1

11.2

82.2

6.9

-0.8

1.0

26.1

-20.0

-16.7

4.5

6.6

9.0

9.2

9.1

11.8

10.6

5.5

17.8

10.3

82.5

6.5

5.2

0.3

14.4

-8.1

13.7

4.7

7.3

6.9

7.1

12.4

8.5

7.3

2.2

14.3

8.9

80.5

6.5

5.0

-1.1

9.7

-8.9

-2.7

4.2

6.8

<TableⅡ-1> Recent economic trends


- In terms of different retail business types, there was a rise in convenience stores

(15.7%), department stores (13.0%), nonstore retailing (9.3%), and large discount

stores (7.5%).

Investment trends

Facility investments saw a year-on-year drop of 1.1% due to a decrease in

investments in transportation equipment such as passenger cars and airplanes,

despite an increase in investments in machinery such as conveying machinery for

industrial use.

The number of domestic orders for machinery went down in the public sector.

However, the number of orders rose for other transportation equipment and

machinery and equipment, etc. in the private manufacturing sector, leading to an

overall year-on-year rise of 9.7%.

Completed construction witnessed a year-on-year drop of 8.9% owing to decreased

performance in construction and public works.

Construction orders (at current prices) posted a year-on-year decrease of 2.7%,

owing to decreased orders in the private sector for electricity generation, electric

power transmission, etc. and in the public sector for flood control afforestation,

housing, etc.

Business indices

The cyclical component of coincident index went down 0.7%p from the previous

month, attributable to a drop in the domestic shipment index, manufacturing

operation ratio index, wholesale and retail sales index, and completed construction

value, despite a rise in non-farm payrolls and import value.

The leading index’s year-on-year comparison recorded a 0.5%p decrease from the

previous month, owing to a drop in the consumer expectation index, the ratio of

those seeking to hire to those seeking jobs, capital good import value, inventory cycle

index, etc., despite an increase in the value of construction orders and KOSPI (Korea

Composite Stock Price Index).




Source: Statistics Korea, Industrial Activity Trends (April 2011), May 2011

Source: Statistics Korea, Korean Statistical Information Service (http://kosis.kr). As of April 2011.

Business cycle

According to the Business Cycle Clock (BCC) in April 2011, the value of imports and

the number of employed persons are indicating an upward trend. Industrial



CategoryDecember

2010January2011p

Februaryp Marchp Aprilp

0.8 1.5 0.1 0.4 -0.2

99.8 100.8 100.6 100.6 99.9

0.3 1.0 -0.2 0.0 -0.7

0.5 0.6 -0.2 -0.3 -0.3

2.9 3.0 2.4 1.6 1.1

0.1 0.1 -0.6 -0.8 -0.5

<TableⅡ-2> Composite index

Composite coincident index (Compared to the previous month, %)

·Cyclical component

·Month-to-month difference in cyclical component (p)

Composite leading index (Compared to the previous month, %)

·Compared to the same month the previous year (%)

·Month-to-month difference (%p)

[DiagramⅡ-1] Composite index


production, retail sales, the value of exports, and business survey index are in the

slowdown phase.

The equipment investment index, value of construction complete, and consumer

expectation index are on a downward trend, while service industry activity is making

a recovery.

Compared to March, the value of imports, the number of employed persons, and

service industry activity went up.

In contrast, industrial production, retail sales, value of exports, business survey index,

equipment investment, value of construction complete, and consumer expectation

index went down.

Primary energy consumption for 2010 tentatively reached 260.8 million TOE, a year-

on-year rise of 7.2%.

Primary energy consumption went up by 10.3% in the first quarter and 7.3% in the

second quarter according to quarterly economic growth patterns. The rate of

increase stood at 5.3% in the third quarter and 5.8% in the fourth quarter, indicating

a slowdown in the level of increase in the second half of the year.

The rise in primary energy consumption in 2010 is attributable to the economy taking

a favorable turn (including base effects from the economic downturn of the previous

year) and temperature effect (abnormally low temperatures in the winter and high

temperatures and high humidity in the summer).

- An upswing in production in industries that consume a great amount of electricity

such as fabricated metal as well as an expansion of steel making facilities that

consume a great amount of electricity led the increase in energy consumption in

2010.



Trends in primary energy consumption2


- A rise in energy demand for cooling and heating purposes, triggered by abnormal

weather throughout 2010, was the main cause of the sharp rise in primary energy

consumption.

In 2010, primary energy consumption, excluding energy for raw materials (naphtha

and coking coal), reached around 200.5 million TOE, a year-on-year increase of

7.0%.

- As of 2010, energy for raw materials accounted for 23.1% of primary energy

consumption, gaining strength from the steady growth of the oil/chemical and steel

making industries.



[DiagramⅡ-2] Recent economic and primary energy consumption trends


Notes: 1) Values in parentheses refer to the year-on-year growth rate; p refers to tentative figures2) LNG consumption includes the estimated directly-adopted and consumed volume of POSCO and K-POWER

In the first quarter of 2011, primary energy consumption recorded a year-on-year rise

of 3.7%.

Energy consumption generally maintained a higher level of growth than the economic

growth rate from the second quarter of 2009 through the fourth quarter of 2010.

However, it posted a lower level of increase than the economic growth rate (4.2%) in

the first quarter of 2011.

Favorable conditions in the economy continued in 2011 and there was also the




1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Coal 25.0 25.1 29.2 29.2 108.4 30.7 27.7 30.1 31.0 119.5 30.4 (Million ton) (-0.3) (-0.1) (7.3) (8.6) (4.0) (22.9) (10.6) (3.3) (6.3) (10.3) (-0.8)

-Excluding 20.4 20.3 23.6 23.3 87.6 23.3 21.6 24.3 24.9 94.1 24.2coking coal (6.2) (5.6) (10.9) (11.6) (8.7) (14.2) (6.2) (3.0) (6.8) (7.4) (3.8)

Oil 199.1 192.5 183.6 203.2 778.5 198.8 193.5 192.1 210.1 794.5 205.0(Million bbl) (-2.8) (5.3) (0.4) (6.9) (2.3) (-0.1) (0.5) (4.6) (3.4) (2.1) (3.1)

-Excluding 117.7 122.4 104.7 121.0 455.9 117.7 111.3 109.1 124.7 462.8 116.3naphtha (-3.6) (4.9) (1.1) (3.9) (1.5) (0.0) (-1.0) (4.2) (3.1) (1.5) (-1.2)

LNG 8.5 4.6 4.6 8.4 26.1 10.7 6.5 5.5 9.4 32.0 12.0 (Million ton) (-14.7) (-11.8) (-2.0) (11.0) (-4.9) (25.0) (39.8) (20.2) (11.8) (22.6) (12.7)

Hydro 0.8 1.4 2.5 0.9 5.6 1.2 1.6 2.3 1.5 6.6 1.5(TWh) (-12.3) (9.1) (4.8) (-4.2) (1.4) (48.0) (10.5) (-7.9) (66.5) (16.4) (21.4)

Nuclear power 36.6 37.3 37.2 36.6 147.8 36.0 36.5 37.6 37.8 147.8 36.0 (TWh) (-8.2) (3.1) (-0.8) (-1.9) (-2.1) (-1.6) (-2.3) (0.9) (3.2) (0.0) (0.0)

Other 1.3 1.3 1.3 1.6 5.5 1.4 1.4 1.3 1.6 5.7 1.5(Million TOE) (8.5) (6.6) (5.6) (1.9) (5.4) (3.7) (3.7) (3.7) (3.7) (3.7) (10.8)

Primary energy 62.5 56.9 58.2 65.7 243.3 68.9 61.0 61.3 69.5 260.8 71.5(Million TOE) (-5.1) (1.3) (2.0) (6.5) (1.1) (10.3) (7.3) (5.3) (5.8) (7.2) (3.7)

Primary energy 48.9 43.3 44.2 51.1 187.5 53.4 46.2 46.6 54.3 200.5 55.8

-Excluding for raw (-4.5) (2.2) (3.4) (6.2) (1.7) (9.2) (6.7) (5.4) (6.3) (7.0) (4.4)materials

<TableⅡ-3> Primary energy consumption trends


record-breaking cold wave in January (5.4℃ drop from average month temperatures),

but primary energy consumption recorded a relatively low level of increase in the first

quarter.

* Industrial activity (industrial production) rose 10.5% in the first quarter: (Year 2010)

129.8 → (Year 2011) 143.3

* HDD (Heating Degree Day) rose 6.9% in the first quarter: (Year 2010) 1,588 →

(Year 2011) 1,696

- There were various factors that would have triggered a rise in energy demand in the

first quarter such as favorable conditions in the economy and abnormally low

temperatures. Energy consumption rose gradually nonetheless. This is presumed to

be the result of a soar in international oil prices and the implementation of energy-

saving policies, such as the ‘measure on placing restrictions on heating

temperatures in buildings’.

Trends in consumption of each energy source

Oil consumption recorded sound growth of 2.1% in 2010 and 3.1% in the first

quarter of 2011.



[DiagramⅡ-3] Trends in Dubai oil prices


- Oil consumption remained weak in the first half of 2010. However, annual oil

consumption indicated relatively high growth, owing to a substantial increase in

consumption of transport fuel and oil for industrial raw materials in the second half

of the year, in addition to a sharp rise in consumption in the transformation (power

generation) sector.

- In the first quarter of 2011, oil consumption indicated a year-on-year rise of 3.1%,

owing to a rise in naphtha consumption triggered by favorable conditions in the

oil/chemical industry as well as an increase in consumption of kerosene and diesel

for heating owing to the cold wave.

- Consumption of petroleum products for transport indicated sound growth in

January and February 2011 (gasoline: 5.7%; diesel for transport: 5.3%, etc.), but

consumption dropped in March due to a soar in oil prices.

* Rate of increase in consumption of key products in the first quarter: Naphtha:

9.3%; kerosene: 5.3%; gasoline: 2.8%; diesel for transport: 1.7%

* Rate of increase in consumption of oil for transport in March: Gasoline -2.4%;

diesel -4.3%



[DiagramⅡ-4] Trends in consumer prices of oil for transport


Coal consumption witnessed a year-on-year rise of 10.3% in 2010, and a year-on-

year reduction of 0.8% in the first quarter of 2011.

- Coal consumption led a rise in primary energy consumption in the first half of 2010.

However, the rate of increase in coal consumption slowed down in the second half

of the year. Consumption slightly went down in the first quarter of 2011.

·In the first half of 2010, the rate of increase in coal consumption recorded 16.7%,

the highest figure in the 2000s, resulting from a rise in coking coal consumption in

the steel making industry, triggered by economic recovery, as well as base

effects. In the second half of the year, the rate of increase slowed down to 4.8%

owing to decreased base effects.

·In the first quarter of 2011, there was a reduction of 0.8% in tandem with a year-

on-year decrease of 15.1% in coking coal consumption in the steel making

industry, which previously led a rise in overall coal consumption.

- Coal consumption for power generation went up 8.1% in 2010 and 2.0% in the first

quarter of 2011. This is attributable to the continued use of power generation

facilities at the highest level, notwithstanding zero facility expansion after the

construction of Unit 4 of the Yeongheung Thermal Power Plant and Unit 8 of the

Hadong Thermal Power Plant in 2009.



[DiagramⅡ-5] Trends in primary energy consumption increase rate


In 2010, natural gas (LNG) consumption recorded a year-on-year rise of 22.6%,

followed by two-digit growth (12.7%) in the first quarter of 2011.

- Natural gas consumption for production of town gas and natural gas consumption

for power generation both indicated high growth owing to influence from the

economic recovery and abnormal climate in 2010. In particular, consumption of

natural gas for power generation recorded a year-on-year rise of 38.3%, attributable

to a substantial rise in electricity demand in addition to zero expansion of base-load

power facilities.

- Favorable conditions in the economy continued in the first quarter of 2011. This,

and the record-breaking cold wave led to a substantial rise in natural gas

consumption mainly for power generation.

The level of nuclear power generation in 2010 was similar to that recorded in 2009. In

the first quarter of 2011, the same level as the same period the previous year was

maintained.

- Stagnant nuclear power generation in 2010 is attributable to a year-on-year

decrease of 1.3% in nuclear power generation from the first through the third

quarter, resulting from no additional installation of power generation facilities and

concentration of planned facility inspections (Uljin Nuclear Power Plant Units 1, 2, 4,

and 5, Yeonggwang Nuclear Power Plant Units 1, 2, 3, and 6, Wolseong Nuclear

Power Plant Unit 4, Gori Nuclear Power Plant Units 1 and 2, etc.).

- The level of power generation went down compared to the same period the

previous year owing to planned inspection of major facilities in January and

February 2011. However, it went up 8.6% in March, a result of operation of Singori

Nuclear Power Plant Unit 18).

Level of contribution of each factor that led to an increase in primary energy

consumption in 2010 compared to the previous year



8) Korea’s 21st nuclear power plant; Commercial operation commenced on February 28, 2011


The economic growth factor explains for 86.1% (15.1 million TOE) of the increase in

primary energy consumption (17.5 million TOE).

The temperature effect in 2010 contributed 28.2% (4.9 million TOE) towards the

increase in primary energy consumption.

* Average temperature fluctuations: (First quarter) 1.9℃↓ (April/May) 2.6℃↓ (Third

quarter) 0.8℃↑ (Fourth quarter) 0.7℃↓

Changes in other factors, such as improvements in energy usage efficiency, are

presumed to have resulted in energy consumption reduction effects of 14.3% (2.5

million TOE).


Level of contribution of each factor that led to a year-on-year rise in primary energy


The economic growth effect contributed 107.9% (2.8 million TOE) to a rise in primary

energy consumption.

- This means that primary energy consumption would have increased by 2.8 million

TOE in the first quarter of 2011 as a result of economic growth (4.2%, tentative)

effect, if there were no changes in other factors that trigger a change in

consumption such as energy efficiency improvements.



Category

Level of contribution to increase in primaryenergy consumption

(%p)

Contribution to a rise in consumption byeach factor in 2010







<TableⅡ-4> Level of contribution of each factor that led to a rise in primary energy consumption in 2010


Notes: Values in parentheses refer to the level of contribution of each factor to energy consumption changes

The temperature effect contributed 74.8% (1.9 million TOE) to a rise in primary energy

consumption.

- The average temperature in the first quarter substantially dropped (1.2℃↓)

compared to the same period the previous year, including the record-breaking cold

wave in 48 years that took place in January 2011. Such weather led to a rise in

energy demand for heating.

* Average temperature in the first quarter: (Year 2010) 0.4℃ → (Year 2011) -0.8℃;

Increase of 6.9% in HDD

* Average temperature in January: (Year 2010) -4.5℃ → (Year 2011) -7.2℃;

Increase of 11.9% in HDD

It is presumed that consumption went down 2.1 million TOE as a result of changes in

other factors such as energy efficiency improvements, a rise in oil prices, and

changes in industrial structure.



[DiagramⅡ-6] Level of contribution to increase in primary energy consumption by each factor in 2010



Level of contribution of each factor that led to a rise in primary energy consumption

from 2000 through 2010

In the 2000s, the economic growth effect had the biggest influence on the rise in

primary energy consumption.



Category

Level of contribution to increase in primaryenergy consumption

(%p)

Contribution to a rise in consumption byeach factor in the first quarter of 2011







<TableⅡ-5> Level of contribution of each factor that led to a rise in primary energy consumption in the first quarter of 2011

[DiagramⅡ-7] Level of contribution to increase in primary energy consumption by each factor in the first quarter of 2011


The energy efficiency improvement effect generally brought down primary energy

consumption.

With the stabilization of the economic growth rate in the 2000s, abnormal weather is

having increased influence on changes in the energy consumption increase rate.

- Energy consumption is being substantially influenced by temperature changes in

tandem with increased propagation of cooling and heating devices in buildings

(including those for residential purposes), triggered by a rise in income levels and

high growth of the service industry.

- It is assumed that the climate factor triggered a 2.8% rise in the primary energy

consumption increase rate in 2005, while causing a 2.7% drop in 2006. It is also

assumed that the climate factor caused a 2.0% rise in the primary energy

consumption increase rate in 2010.

Presumed influence of temperature on primary energy consumption in the 2000s

- It is assessed that temperature had a considerable influence on primary energy

consumption in the 2000s.

- This is presumed to be a result of higher sensitivity of energy consumption to

temperature changes owing to increased propagation of cooling and heating



[DiagramⅡ-8] Level of contribution of each factor towards annual primary energy increase since 2005


devices, triggered by a rise in income levels and the abnormal climate that

frequently occurred in the 2000s.

- It is assumed that the climate factor served to substantially raise primary energy

consumption in 2005 and 2010.



[DiagramⅡ-9] Assumed changes in primary energy consumption caused by the temperature effect

Category 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010p

198.4 208.6 215.1 220.2 228.6 233.4 236.5 240.8 243.3 260.8

2.2 -1.2 -2.2 -2.1 4.0 -2.3 -2.7 -0.3 -0.7 4.2

1.1 -0.6 -1.0 -1.0 1.7 -1.0 -1.2 -0.1 -0.3 1.6

<TableⅡ-6> Temperature effect on increase in primary energy consumption

primary energy(1 million TOE)

Temperatureeffect

Amount ofincrease/decrease(1 million TOE)

Increase/decreaserate (%)


Notes: Total HDD from January through March, November through December

Notes: Total CDD from June through September

Level of contribution of each final energy source to an increase in primary energy

consumption

Level of contribution of each energy source in 2010

- In 2010, the level of contribution of electricity (triggering energy consumption for

power generation) and energy for industrial raw materials (naphtha and coking coal)

stood at 46.3% and 26.0%, respectively, accounting for 72.3% of the primary

energy increase.



[DiagramⅡ-10] Changes in HDD

[DiagramⅡ-11] Changes in CDD


- The level of contribution of town gas, oil, anthracite (for industrial and

residential/commercial use), and new & renewable energy stood at 15.7%, 5.6%,

3.4%, and 1.1%, respectively.

Level of contribution of each energy source in the first quarter of 2011

- The level of contribution of electricity (triggering energy consumption for power

generation) and energy for industrial raw materials (naphtha and coking coal) stood

at 55.6% and 6.8%, respectively. The level of contribution of energy for raw

materials sharply dropped compared to 2010 as a result of decreased

consumption of coking coal (-15.1%).

- The level of contribution of town gas, a key source of energy for heating, reached

20.6% in the first quarter owing to influence from the cold weather. In contrast, the

level of contribution of petroleum for fuel stood at -7.0% owing to decreased

consumption.



[DiagramⅡ-12] Level of contribution of each energy source to primary energy increase in 2010




[DiagramⅡ-13] Level of contribution of each energy source to primary energy increase in the first quarter of 2011


In 2010, final energy consumption rose by 6.6% from the previous year to stand at

194.1 million TOE, according to tentative figures.




Trends in final energy consumption3


1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Industry 25.4 26.1 26.6 28.0 106.1 28.9 28.3 27.6 29.7 114.5 29.7(Million TOE) (-6.1) (-1.3) (0.2) (6.1) (-0.3) (13.8) (8.5) (3.8) (5.9) (7.9) (2.8)-Excluding for 11.8 12.5 12.6 13.4 50.3 13.4 13.5 12.9 14.5 54.3 14.0raw materials (-4.9) (-1.1) (2.8) (4.8) (0.4) (13.3) (7.8) (2.6) (8.0) (7.9) (4.6)

Transport 8.5 9.1 9.1 9.3 35.9 8.5 9.2 9.5 9.6 36.8 8.8(Million TOE) (-2.9) (0.8) (2.3) (1.3) (0.4) (0.8) (1.9) (4.2) (2.8) (2.4) (3.2)

Residential 12.7 7.0 5.8 10.3 35.7 13.6 7.8 6.2 10.6 38.3 14.0/commercial(Million TOE) (-8.2) (0.9) (1.2) (5.1) (-1.4) (7.7) (12.3) (6.0) (3.4) (7.1) (2.7)

Public/other 1.1 1.0 1.0 1.2 4.3 1.2 1.0 1.1 1.2 4.6 1.2(Million TOE) (-0.5) (11.9) (5.9) (3.6) (4.8) (5.4) (1.8) (11.0) (3.3) (5.2) (2.7)

Total 47.7 43.1 42.5 48.7 182.1 52.3 46.4 44.3 51.1 194.1 53.8(Million TOE) (-6.0) (-0.3) (0.9) (4.9) (-0.3) (9.7) (7.6) (4.4) (4.7) (6.6) (2.8)

Total 34.1 29.5 28.5 34.1 126.3 36.8 31.5 29.6 35.9 133.9 38.1-Excluding for (-5.5) (0.3) (2.4) (3.8) (0.0) (7.8) (6.8) (4.1) (5.0) (6.0) (3.5)raw materials

Town gas 6.9 3.6 2.7 5.3 18.4 7.9 4.3 2.8 5.7 20.8 8.1(Billion m3) (-6.1) (-1.1) (-2.5) (5.4) (-1.5) (14.5) (20.9) (6.1) (7.8) (12.6) (2.8)

Oil 187.2 186.1 181.0 197.9 752.2 189.0 187.8 187.0 204.2 768.0 194.7(Million bbl) (-4.9) (3.6) (1.0) (6.8) (1.5) (1.0) (0.9) (3.3) (3.2) (2.1) (3.0)-Excluding 105.8 106.0 102.1 115.7 429.6 107.9 105.7 104.0 118.7 436.3 106.0naphtha (-7.2) (2.1) (2.2) (3.5) (0.0) (1.9) (-0.3) (1.9) (2.6) (1.6) (-1.8)

Electricity 100.3 94.0 99.0 101.2 394.5 112.5 103.6 109.1 109.0 434.2 121.4(TWh) (-2.3) (2.0) (2.7) (7.7) (2.4) (12.2) (10.3) (10.2) (7.7) (10.1) (7.9)

Coal 8.2 8.2 9.5 10.0 35.9 11.3 10.2 9.4 10.4 41.2 10.6(Million ton) (-15.4) (-16.4) (-0.5) (-3.3) (-8.9) (37.0) (24.1) (-1.2) (3.9) (14.7) (-5.5)-Excluding 3.7 3.4 3.9 4.2 15.2 3.9 4.0 3.5 4.3 15.8 4.4coking coal (-7.5) (-11.5) (8.6) (-5.6) (-4.3) (6.5) (17.1) (-9.1) (3.3) (4.0) (12.6)

Thermal and 1,870 1,391 1,223 1,933 6,418 2,001 1,486 1,269 2,009 6,765 2,173other (1.5) (1.7) (1.9) (4.6) (2.5) (7.0) (6.8) (3.7) (3.9) (5.4) (8.6)(Thousand TOE)

<TableⅡ-7> Trends in final energy consumption


Final energy consumption in 2010 marked year-on-year growth of 6.0% to post

133.9 million TOE, excluding energy for raw materials (naphtha, coking coal).

- In 2010, energy for raw materials accounted for 31.0% of final energy consumption.

- With regards to the share of final energy consumption taken up by each energy

source and use in 2010, energy for industrial raw materials took up the highest

share, followed by petroleum for fuel (29.9%), electricity (19.2%), and town gas

(11.3%).

Final energy consumption in the first quarter of 2011 recorded 53.8 million TOE,

a year-on-year increase of 2.8%.

In the first quarter of 2011, all final consumption sectors indicated an even level of

energy consumption increase of around 3%.

- Despite the record-breaking cold wave in the first quarter this year, energy

consumption by the residential/commercial and public/other sectors, which are

relatively highly influenced by the weather, rose by a mere 2.7%.

What is most noticeable in terms of each energy source is the rapid increase (7.9%) in

electricity consumption as a result of continued favorable conditions in industries that

consume a great amount of electricity and the abnormal cold wave, as well as a rise in

consumption (9.3%) of naphtha for raw material use in the petrochemical industry.



[DiagramⅡ-14] Final energy consumption by energy source and use


Final energy consumption trends by sector

In 2010, the industrial sector and residential/commercial sector indicated a year-on-

year rise of 7.9% and 7.1%, respectively, thus leading a rise in final energy

consumption (2.4% in the transport sector and 5.2% in the public/other sector).

- In the first quarter of 2011, the transport sector and industrial sector recorded a

year-on-year increase of 3.2% and 2.8%, respectively, thus posting a relatively high

consumption increase rate.

In the first half of 2010, consumption in the industrial sector increased by 11.1%, but

the rate of increase slowed down to a year-on-year rise of 4.9% and 2.8% in the

second half of 2010 and the first quarter of 2011, respectively, owing to reduced

base effects and sluggish consumption of coking coal.

- The slowdown in consumption for industrial use in the first quarter of 2011 resulted

from a considerable drop in coal (-6.2%) consumption, despite a soar in electricity

(11.0%) and town gas (9.1%) consumption.

- Consumption of electricity for industrial use, which sensitively responds to business

fluctuations, recorded a two-digit increase in the first quarter of 2011, following

12.9% in 2010, attributable to continued favorable conditions in industries that

consume a great amount of electricity.

Source: Statistics Korea, Korean Statistical Information Service(http://kostat.go.kr/portal/korea)



[DiagramⅡ-15] Business trends in the manufacturing industry and changes in electricity consumption for industrial use


In the 2000s, consumption in the transport sector rapidly stabilized9). It indicated a

year-on-year rise of 2.4% in 2010, attributable to an upswing in gasoline and jet oil

consumption, and maintained sound growth of 3.2% in the first quarter of 2011.

- Gasoline consumption rose 4.7% in 2010 and 2.7% in the first quarter of 2011,

attributable to an increase in the number of registered gasoline-powered vehicles as

a result of the economic recovery.

- Jet oil in the transport sector rose 8.3%, owing to a rise in overseas travels and

exports. It also rose 3.7% in the first quarter of 2011, thus leading an increase in

transport energy consumption.

- In contrast, diesel for transport indicated an increase of merely 0.7% in 2010 and

1.6% in the first quarter of 2011, owing to a relatively rapid rise in diesel prices and

sluggish sales of vans and trucks that mainly use diesel, despite the economic

recovery.

In 2010, consumption in the residential/commercial sector recorded high growth of

7.1% due to influence from the economic recovery, and abnormally low temperatures

in the winter and high temperatures and high humidity in the summer.

- In the first quarter of 2011, a relatively gradual increase rate of 2.7% was recorded

despite the emergence of factors that would have triggered a rise in energy

consumption, resulting from abnormally low temperatures (average temperature

indicated a year-on-year drop of 1.2℃ and HDD recorded a year-on-year rise of

6.9%).

Energy consumption in the public/other sector10) marked a rise of 5.2% in 2010 and

2.7% in the first quarter of 2011.

Consumption in the residential/commercial and public/other sectors, in which energy

consumption for heating purposes takes up a high proportion, indicated a low



9) Energy consumption in the transport sector recorded high growth of an annual average 7.9% in the 1990s.However, it posted low growth of an annual average 1.7% in the 2000s.

10) Consumption in this sector includes energy consumption by government offices, for miliary purposes, andby public service providers such as those in charge of water supply.


increase rate in the first quarter of 2011. This seems to be partly a result of influence

of energy-saving policies such as the ‘measure on placing restrictions on heating

temperatures in buildings’that was implemented in response to skyrocketing oil

prices.

Trends in final energy consumption by energy source in 2010

In 2010, town gas, electricity, and coal consumption recorded a year-on-year rise of

12.6%, 10.1%, and 14.7%, respectively, thus indicating noticeable growth.

In 2010, final petroleum product consumption rose 2.1%, which is a relatively high

figure, attributable to the economic recovery and the cold weather.

- From 2000 through 2009, petroleum products recorded an annual average

consumption increase rate of 0.8%, thus indicating a slowdown in the level of

increase. In 2010, however, consumption of petroleum products remained strong

as a result of a rise in consumption of naphtha for raw materials (2.8%) and of oil for

heating.

Electricity consumption posted a rise of 10.1%, owing to base effects from the

sluggish consumption in 2009 and an increase in consumption for heating purposes



[DiagramⅡ-16] Trends in the rate of final energy consumption increase by sector


owing to the climate as well as a rise in industrial activities.

- The rate of increase in electricity consumption remained high, posting two-digit

figures, from the first through the third quarter. However, it somewhat slowed down

to 7.7% in the fourth quarter.

- Consumption of electricity for industrial use went up 12.9% owing to a considerable

rise in production activities and facility investments in the manufacturing sector,

especially industries that consume a great amount of electricity.

- Electricity consumption for commercial and residential use also indicated relatively high

growth owing to a considerable rise in the use of electric equipment for cooling and

heating purposes, influenced from the economic recovery and abnormal weather.

In 2010, peak demand was reached on December 15 at 71,308MW. The power

supply capability was 75,747MW. Peak demand recorded a year-on-year increase of

a whopping 6.8% due to the cold wave, resulting in a supplied reserve margin of

6.2%, the lowest figure in the 2000s.

- Peak demand in the winter of 2010 to 2011 reached 73,137MW, a 6.1% rise from

the previous year, attributable to an upswing in the economy, continued cold wave,

and relatively affordable electricity charge.

In 2010, consumption of town gas recorded the highest increase - 12.6% - since

2001, amid high consumption (24.4%) in the industrial sector.

- Consumption of town gas for residential/commercial use increased by a great

extent, influenced by abnormally low temperatures in the winter, spring, and autumn.

Coal consumption went up 30.5% in the first half of the year as a result of a soar in

coking coal consumption for steel making. However, consumption by key demand

industries slowed down in the second half of the year, resulting in a rise of merely

1.4%. Annually, coal consumption rose 14.7%.

- Consumption of bituminous coal for steel making, which accounts for most (at least

70%) of the consumption of coal in the final consumption sector, went up 22.6%,

thus leading the rise in overall consumption.

- Consumption of bituminous coal for cement production continued a downward

trend in 2009 and 2010 (-14.8% in 2009 → -9.1% in 2010) due to an increase in




inventory of cement, triggered by the stagnant construction business, despite an

upswing in the overall economy.

Thermal energy posted a high increase rate of 10.8% owing to increased

dissemination of district heating and temperature effects. Consumption of new &

renewable energy indicated gradual growth of 3.7%.

Trends in final energy consumption by energy source in the first quarter of 2011

Electricity consumption sharply rose from a continued upswing in industrial activities

and the cold wave.

- Electricity, town gas, and oil consumption went up 7.9%, 2.8%, and 3.0%,

respectively, but coal consumption indicated a year-on-year drop of 5.5% owing to

decreased consumption of bituminous coal for steel making.

- In terms of oil, naphtha consumption rose 9.3% as a result of favorable conditions

in production in the petrochemical industry. On the other hand, consumption of

other products indicated relatively low growth such as gasoline (2.7%), kerosene

(5.3%), and diesel (1.7%).

- Consumption of town gas for industrial use rose 9.1%, thus leading a rise in overall

town gas consumption. Consumption for residential/commercial use recorded a

gradual increase of 1.1%.

- Despite the fact that bituminous coal consumption for steel making posted a year-

on-year rise of 5.6% and 10.9%, respectively, in February and March, coal

consumption recorded a year-on-year drop of 5.5% owing to a sharp decrease (-

40.5%) in January.

- Electricity consumption indicated a year-on-year rise of 7.9% because consumption

for industrial use remained to be strong (year-on-year rise of 11.0%).

- Electricity consumption for industrial use continued two-digit growth for four

consecutive months from October 2010 through February 2011, attributable to an

upswing in production activities in industries that consume a great amount of

electricity (machinery and equipment, chemical products, automobiles, steel

making, etc.). It also recorded relatively high growth of 8.1% in March.




A. Trends in petroleum product consumption by sector

Petroleum product consumption in the first quarter of 2011 reached 205.0 million

barrels, a year-on-year rise of 3.1%.

Oil consumption rose as a result of an increase in demand for international transport,

triggered by the economic recovery, as well as favorable conditions in the

petrochemical industry.

In March 2011, total oil consumption increased 3.2% owing to a rise in naphtha

consumption, despite a decrease in consumption of key products, including

gasoline, as a result of high oil prices.

With regards to petroleum product consumption by sector in 2011, consumption went

up in all sectors, except for consumption for use as fuel in the industrial sector.

The transport sector indicated a year-on-year rise of 2.6% due to a rise in domestic

sales of automobiles as well as in international freight transport and overseas

traveling.

- As of May 2011, the number of registered vehicles saw an increase of 1.5% from

the end of last year to reach 18.2 million, of which the number of registered

passenger cars went up 1.9% while that of vans went down 1.0%.

The industrial sector recorded a year-on-year rise of 2.9%, despite a reduction in

petroleum consumption for fuel, attributable to a rise in naphtha demand resulting

from favorable conditions in the petrochemical industry.

The residential/commercial/public sector recorded a year-on-year rise of 4.7% owing

to a soar in HDDs resulting from abnormal temperatures as well as base effects from

decreased consumption in the previous year.

The transformation sector witnessed a year-on-year rise of 5.0%, owing to an

increase in propane demand for production of town gas, despite decreased



Trends in petroleum product consumption4


consumption for power generation as a result of worsened unit cost of heavy oil

power generation.




[DiagramⅡ-17] Changes in petroleum product consumption increase rate by sector

(Unit: Million bbl)


1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Transport61.0 65.1 65.4 66.9 258.4 61.2 66.2 67.9 68.4 263.7 62.8(-3.2) (0.2) (1.7) (1.2) (0.0) (0.4) (1.6) (3.9) (2.2) (2.1) (2.6)

Industry107.2 109.9 106.3 111.6 434.9 107.8 109.1 109.3 115.8 442.1 110.9(-3.0) (6.3) (0.2) (10.1) (3.3) (0.6) (-0.7) (2.9) (3.8) (1.6) (2.9)

- Fuel20.2 21.5 20.2 22.0 83.9 20.2 18.9 19.2 22.4 80.7 16.6(-8.5) (2.6) (-1.0) (5.9) (-0.4) (0.1) (-12.2) (-4.7) (1.9) (-3.7) (-17.8)

- feedstock87.0 88.3 86.1 89.6 351.1 87.6 90.2 90.1 93.4 361.3 94.3(-1.6) (7.3) (0.5) (11.1) (4.2) (0.7) (2.1) (4.6) (4.3) (2.9) (7.6)

Residential/co 19.0 11.1 9.4 19.5 58.9 20.0 12.6 9.7 20.0 62.3 20.9mmercial/public (-18.5) (-1.5) (5.0) (8.4) (-4.1) (5.1) (13.3) (4.0) (2.6) (5.7) (4.7)

Transformation11.9 6.4 2.6 5.3 26.2 9.8 5.6 5.1 6.0 26.5 10.3(48.3) (93.1) (-29.2) (14.3) (33.2) (-17.3) (-12.3) (92.2) (12.5) (1.0) (5.0)

Total Oil199.1 192.5 183.6 203.2 778.5 198.8 193.5 192.1 210.1 794.5 205.0(-2.8) (5.3) (0.4) (6.9) (2.3) (-0.1) (0.5) (4.6) (3.4) (2.1) (3.1)

<TableⅡ-8> Trends in petroleum product consumption by sector


B. Trends in key petroleum product consumption

With regards to trends in oil consumption by key product in the first quarter of 2011,

consumption of products for transport went up, including gasoline and jet oil, as well

as naphtha for industrial raw material use. On the other hand, consumption of heavy oil

and LPG decreased.


Gasoline consumption posted a year-on-year rise of 2.8% to reach 16.3 million

barrels, attributable to the release of new vehicles and quick economic recovery,

despite high oil prices.

Diesel for transport recorded a year-on-year rise of 1.6%, a result of a rise in freight

traffic in tandem with the economic recovery and an increase in sales of diesel-

powered vehicles whose fuel costs are relatively affordable due to high oil prices.



(Unit: Million bbl)


1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Gasoline15.2 16.4 17.1 17.2 65.9 15.9 16.9 18.5 17.7 68.9 16.3

(2.1) (6.8) (6.2) (3.5) (4.7) (4.6) (2.8) (8.1) (3.1) (4.6) (2.8)

Diesel for 23.9 27.1 25.9 27.2 104.1 23.8 27.0 26.5 27.6 104.8 24.2

transport (-8.2) (-1.9) (0.8) (-1.1) (-2.6) (-0.2) (-0.3) (2.2) (1.2) (0.7) (1.6)

16.7 10.3 8.6 18.6 54.2 17.9 11.0 10.4 19.9 59.2 18.7

(-17.2) (5.1) (8.6) (6.6) (-2.0) (7.8) (7.7) (19.9) (6.8) (9.3) (4.1)

23.8 17.1 12.0 16.5 69.4 20.0 15.1 13.9 16.6 65.5 19.3

(3.6) (8.6) (-16.2) (-2.5) (-0.8) (-16.2) (-12.0) (15.8) (0.7) (-5.6) (-3.1)

Naphtha81.4 80.1 78.9 82.2 322.6 81.1 82.1 83.0 85.4 331.7 88.7

(-1.6) (5.8) (-0.5) (11.7) (3.6) (-0.3) (2.6) (5.1) (3.9) (2.8) (9.3)

26.1 26.1 27.3 26.8 106.3 26.5 26.2 25.5 27.0 105.2 24.6

(1.3) (3.9) (2.6) (9.9) (4.3) (1.3) (0.1) (-6.3) (0.8) (-1.1) (-7.0)

<TableⅡ-9> Trends in key petroleum product consumption

Heavy oil(including for

power generation)

LPG(including for

power generation)

Kerosene+Diesel(including for

power generation)


Consumption of kerosene and diesel, excluding diesel for transport, witnessed a

year-on-year rise of 4.1% owing to a considerable rise in consumption for heating

purposes in the residential/commercial sector due to abnormal temperatures.



[DiagramⅡ-19] Changes in consumption of diesel for transport and increase rate

[DiagramⅡ-18] Changes in gasoline consumption and increase rate


Consumption of heavy oil posted a year-on-year drop of 3.1%, attributable to a

decrease in consumption for industrial and power generation use, notwithstanding a

rise in consumption for transport in tandem with an upswing in exports.



[DiagramⅡ-21] Changes in consumption of heavy oil and increase rate

[DiagramⅡ-20] Changes in consumption of kerosene and diesel, and increase rate


Naphtha recorded a year-on-year rise of 9.3% as a result of a rapid rise in

consumption as raw material in the petrochemical sector, triggered by growth in

domestic demand and a rise in the international margin of ethylene, and decreased

use of LPG as a naphtha replacement.

LPG consumption recorded a year-on-year decrease of 7.0%, owing to a decrease

in consumption for naphtha replacement and for transport, despite a substantial rise

in propane demand in the gas production sector.



[DiagramⅡ-23] Changes in LPG consumption and increase rate

[DiagramⅡ-22] Changes in consumption of naphtha and increase rate


Electricity consumption reached a year-on-year rise of 10.1% in 2010 and year-on-

year rise of 7.9% in the first quarter of 2011.

In 2010, electricity consumption substantially rose for all types of uses, a result of a

rise in industrial production in tandem with the economic recovery, abnormally low

temperatures in the winter, and high temperatures and high humidity in the summer.

- Electricity consumption for industrial use especially recorded the highest growth

since 1990 to post 12.9%.

- This is presumed to be partly because of high growth of the fabricated metal

industry, which is an industry that consumes a great amount of electricity, and

operation of a new electric furnace steel factory (annual production capacity of 3

million tons) of Dongbu Steel. Base effects from sluggish consumption witnessed in

the previous year (1.6% increase) also contributed to a great extent.

* The value added growth rate of the fabricated metal industry in 2010 was 19.5%.

- In 2010, the climate factor further increased electricity demand for heating and

cooling purposes in each season, leading to a substantial rise in consumption for

residential and commercial use.

* Climate changes compared to the same period the previous year: (First half of the

year) 18.3% increase in HDD, (July-August) 16.1% increase in CDD, (Fourth

quarter) 6.3% increase in HDD

With regards to the electricity consumption increase rate by quarter in 2010, two-digit

growth year-on-year was recorded from the first through the third quarter. The level

of growth decreased and remained at a single digit level in the fourth quarter.

In the first quarter of 2011, electricity consumption posted a year-on-year rise of 7.9%.

Electricity consumption for industrial use indicated a year-on-year increase of 11.0%

to reach 60.1 TWh, owing to continued favorable conditions in the economy.

- A high increase in consumption continued as a result of a rise in demand in



Trends in electricity consumption5


industries that consume a great amount of electricity such as machinery and

equipment (22.3%), steel (14.9%), and automobile (15.1%).

Consumption for residential and commercial use went up 3.3% and 5.7%,

respectively, owing to continued abnormally low temperatures in the first quarter,

including the record-breaking cold wave in January.

There was a combination of factors that would have triggered a rise in electricity

demand in the first quarter of 2011 such as the upswing in the economy and

abnormal cold wave. Notwithstanding, consumption went up relatively stably.

- This is presumed to be partly because of government policies, such as the

‘measure on placing restrictions on heating temperatures in buildings’to respond

to a rise in international oil prices as well as electricity demand management at peak

load in the winter.

Notes: 1) Values in parentheses are the year-on-year growth rate (%); p refers to tentative figures2)‘For commercial use’means for the service industry and for public use

Electricity demand by sector

Electricity demand for industrial use witnessed a year-on-year rise of 12.9% to reach

223.2TWh in 2010, and continued two-digit growth (11.0%) in the first quarter of

2011.



(Unit: TWh)


1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Residential14.9 13.8 14.5 14.4 57.6 15.7 14.5 16.2 14.9 61.2 16.2 (1.9) (3.2) (0.2) (4.5) (2.4) (5.3) (5.0) (11.3) (3.3) (6.2) (3.3)

Commercial39.4 31.7 33.6 34.3 139.1 42.7 34.2 37.0 36.0 149.8 45.1 (1.7) (5.2) (3.5) (4.8) (3.7) (8.2) (7.7) (9.9) (4.7) (7.7) (5.7)

Industrial45.9 48.5 50.9 52.5 197.7 54.1 55.0 56.0 58.1 223.2 60.1 (-6.6) (-0.4) (3.0) (10.7) (1.6) (17.8) (13.4) (10.0) (10.8) (12.9) (11.0)

Total100.3 94.0 99.0 101.2 394.5 112.5 103.6 109.1 109.0 434.2 121.4 (-2.3) (2.0) (2.7) (7.7) (2.4) (12.2) (10.3) (10.2) (7.7) (10.1) (7.9)

<TableⅡ-10> Trends in electricity consumption


- The sharp rise in electricity consumption for industrial use is attributable to a

substantial rise in facility investments and production activities in the manufacturing

sector, especially industries that consume a great amount of electricity.

Source: Statistics Korea, Korean Statistical Information Service(http://kostat.go.kr/portal/korea)

- Electricity consumption for industrial use reached bottom in the first quarter of

2009. Afterwards, the rate of increase in consumption remained lower than the rate

of increase in production and facility investments in the manufacturing industry

during the same period.

- As such, the recent sharp rise in electricity consumption is assessed to be a normal

result of an upswing in industrial activities.

A comparison between the first quarter of 2009 and the first quarter of 2011

indicates that the manufacturing industry production index and plant & equipment

investment index went up 40.2% and 38.5%, respectively, but electricity

consumption for industrial use went up a mere 30.8%.



[DiagramⅡ-24]Recent manufacturing business trends and electricity consumption for industrial use


- In 2010, electricity demand in the manufacturing industry, agriculture/forestry/fishing

industry, and mining industry posted year-on-year growth of 12.9%, 9.8%, and

24.6%, respectively.

·In the manufacturing industry, the rate of increase in electricity consumption by the

basic metal industry, which includes the steel industry, was the highest at 19.0%.

The cause was favorable conditions in the steel business and the operation of

new facilities by steel companies.

·In 2010, consumption in the fabricated metal sector posted a year-on-year rise of

17.1%, thanks to continued favorable conditions in production in the automobile

manufacturing industry and ICT industry.

·During the same period, the petrochemical industry also recorded a sound

electricity consumption increase rate of 7.9%.

·The share of electricity consumption taken up by the basic metal industry,

fabricated metal industry, and petrochemical industry, from among manufacturing

industries, was 19.8%, 37.6%, and 20.4%, respectively, in 2010.

- With regards to electricity consumption for industrial use in the first quarter of 2011,

demand in the manufacturing industry, agriculture/forestry/fishing industry, and

mining industry recorded a year-on-year rise of 10.8%, 12.5%, and 25.9%,

respectively, thus maintaining high growth.



[DiagramⅡ-25] Rate of increase in industrial activity indexes and electricity consumption forindustrial use (First quarter of 2009 - First quarter of 2011)


·The basic metal industry posted an electricity consumption increase rate of

14.9%, the highest in the manufacturing industry.

·Consumption by the fabricated metal industry posted a year-on-year increase of

13.5%, mainly in the sector of machinery and equipment (22.3%) and automobile

manufacturing (15.1%). Consumption in the petrochemical industry also recorded

a year-on-year rise of 7.0%.

In 2010, electricity demand for commercial and residential use rose 7.7% and 6.2%,

respectively, from the previous year to reach 149.8TWh and 61.2TWh. In the first

quarter of 2011, demand for commercial use went up 5.7%, while demand for

residential use rose 3.3%.

- Electricity consumption for commercial and residential use indicated a high increase

in 2010 in tandem with a substantial rise in the use of electric equipments used for

heating and cooling, attributable to the economic recovery and abnormal weather

(low temperatures in the winter and high temperatures and humidity in the summer).

- In the first quarter of 2011, a relatively gradual increase was witnessed despite the

fact that the weather continued to be colder than the same period the previous

year. This is attributable to a slowdown in the rise in income levels and the

government’s implementation of energy-saving policies.



[DiagramⅡ-26] Share of electricity consumption in the manufacturing industry by businesstypes in 2010 (%)


Expansion of power plants in 2010

Power plants indicated a year-on-year rise of 3.5% (2,608MW) to reach 76,078MW.

- Coal and gas power plants increased 123MW and 1,900MW, respectively. Oil

power plants went down 37MW.

- New & renewable energy posted year-on-year growth of 22.5% with an expansion

of 622MW.

Source: Korea Power Exchange, Electric power system operation performance for 2010, March 2011



Category Nuclear Coal Oil Gas PumpingNew &

renewables Total

Capacity (MW) 17,716 24,800 5,805 20,471 3,900 3,386 76,078

Increase (MW) - 123 -37 1,900 - 622 2,608

<TableⅡ-11> Expansion of plant capacity by source in 2010

[DiagramⅡ-27] Changes in the electricity consumption increase rate


A. Trends in LNG consumption

In the first quarter of 2011, LNG consumption saw a year-on-year rise of 12.7% to

record 12,028 thousand tons, triggered by high growth in LNG consumption for power

generation.

LNG consumption for town gas production marked year-on-year growth of 6.2% to

reach 7,070 thousand tons, resulting from a continued rise in town gas demand for

industrial use.

LNG consumption for power generation recorded a year-on-year increase of 24.4% to

reach 4,874 thousand tons, owing to a sharp rise in electricity demand, mainly in the

industrial sector, and a drop in the nuclear power plant usage rate as a result of planned

inspections (Uljin Nuclear Power Plant Unit 3, Yeonggwang Nuclear Power Plant Unit 4,

etc.). This is despite base effects from a high rise in the same period the previous year.

- Electricity consumption increase rate in the first quarter of 2011: Industrial (11.0%),

residential/commercial/public (5.0%)

Notes: 1. Values in parentheses are the year-on-year growth rate (%); p refers to tentative figures. Figures for powergeneration include the estimated directly-adopted volume of POSCO and K-POWER.

2. LNG for power generation includes LNG used for district heating.3. LNG total refers to the total amount of primary energy including internal consumption and gas production losses.



(Unit: 1,000 tons)


1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Town gas5,784 2,692 2,202 4,955 15,634 6,659 3,303 2,369 5,280 17,611 7,070(-4.7) (0.9) (1.4) (8.2) (0.1) (15.1) (22.7) (7.6) (6.6) (12.6) (6.2)

Power 2,696 1,869 2,311 3,354 10,229 3,918 3,123 3,071 4,038 14,150 4,874generation (-30.1) (-26.7) (-5.9) (14.9) (-13.2) (45.3) (67.2) (32.9) (20.4) (38.3) (24.4)

LNG total 8,538 4,625 4,556 8,364 26,083 10,674 6,467 5,475 9,355 31,971 12,028(-14.7) (-11.8) (-2.1) (11.0) (-4.9) (25.0) (39.8) (20.2) (11.8) (22.6) (12.7)

<TableⅡ-12> Trends in LNG consumption

Trends in LNG and town gas consumption6


With regards to LNG consumption trends by use since 2009, LNG consumption for

power generation sharply rose together with the economic recovery in the second half

of 2009, thus leading an increase in overall LNG consumption.

LNG demand for power generation has been sharply rising since 2009, a result of

construction of only a small number of base-load power generation facilities. The level

of increase in LNG consumption for power generation reached its peak in the second

quarter of 2010 and then somewhat slowed down. However, the level of increase

went up again in tandem with a soar in electricity demand for industrial use in the first

quarter of 2011.

The level of increase in consumption for production of town gas reached its peak in

the second quarter of 2010. The level of increase is becoming stabilized afterwards.

Notes: The data labels refer to the rate of increase in LNG consumption for power generation



[DiagramⅡ-28] Trends in LNG consumption increase rate per use


B. Trends in town gas consumption

Town gas consumption posted a record increase rate in 201011). In January 2011, it

recorded a year-on-year rise of 8.7% to reach 3,540 million m3, owing to high growth

in consumption for industrial use.

Consumption for residential use in January 2011 posted a year-on-year rise of merely

0.7% although there was a 14.9% year-on-year rise in HDD. This is because high

consumption was witnessed in the previous year, when there was a sharp rise in use

due to abnormally low temperatures and the cold wave. Consumption for

commercial use also rose slightly (1.8%).

- Town gas consumption for industrial use includes town gas consumed for heating

of industrial facilities and town gas used for industrial processes. Town gas

consumption for industrial use marked a high year-on-year increase of 18.7%

despite the high level of growth witnessed in the previous year.

Notes: 1) Values in parentheses are the year-on-year growth rate (%); p refers to tentative figures2) Town gas total includes the amount used for transport and co-generation3) As of June 2011, statistics for each sector of town gas consumption were tallied up to January 2011



11) It recorded two-digit growth (12.6%) for the first time after posting an increase rate of 19.5% in 2000.

(Unit: Million m3)


1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual January

Residential4,150 1,568 585 2,574 8,877 4,481 1,860 548 2,708 9,597 1,891(-4.5) (0.8) (5.7) (7.4) (0.3) (7.8) (18.6) (-6.3) (5.2) (8.1) (0.7)

Commercial1,227 623 640 914 3,404 1,323 686 674 905 3,588 545(-5.3) (3.5) (-0.4) (5.8) (0.01) (7.8) (10.1) (5.3) (-1.0) (5.4) (1.8)

Industrial1,447 1,238 1,271 1,626 5,585 1,962 1,629 1,437 1,920 6,947 841(-6.4) (-2.5) (-4.3) (10.1) (-0.7) (35.5) (31.5) (13.0) (18.0) (24.4) (18.7)

Town gas 6,917 3,591 2,664 5,274 18,445 7,916 4,342 2,826 5,684 20,768 3,540total (-6.1) (-1.1) (-2.5) (5.4) (-1.5) (14.5) (20.9) (6.1) (7.8) (12.6) (8.7)

<TableⅡ-13> Trends in town gas consumption


Notes: The industrial production index refers to the rate of increase from the original indexSource: Korea City Gas Association, The Bank of Korea

A review of recent trends in town gas consumption by month indicates that the level of

increase in town gas consumption moves hand in hand with the level of increase in the

index of industrial production.

Unlike consumption for residential/commercial use, which is greatly influenced by

temperature, consumption for industrial use remains steady throughout the year and

leads a rise in overall town gas consumption.

- Town gas consumed for industrial use is used for heating of industrial facilities as

well as a thermal energy source for industrial processes12). The number of industries

in demand for town gas is steadily on the rise.



[DiagramⅡ-29] Trends in town gas consumption by month

12) Use of town gas for industrial purposes (http://www.samchully.co.kr/): ① Heating furnace (forging furnace,rolling furnace, soaking furnace, preheating furnace, welding and cutting) ② Melting furnace (reverberatoryfurnace, crucible furnace, holding furnace, water-soaking type melting furnace, bottom-heating type meltingfurnace, electric furnace for steelmaking) ③ Heat treatment furnace (quenching furnace, annealing furnace,carburizing furnace, homogenization furnace, aging furnace, annealing furnace, shielding gas generationfurnace) ④ Drying furnace (dry off oven, solvent drying furnace, adhesive drying furnace, shell moulddrying, baking oven, etc.)


Source: Korea City Gas Association

A. Trends in coal consumption

In the first quarter of 2011, coal consumption indicated little change for both industrial

use and power generation owing to base effects. It recorded a year-on-year drop of

0.8% to stand at 30,402 thousand tons.

Consumption of bituminous coal for steel making, which takes up most of coal



[DiagramⅡ-30] Trends in number of customers of town gas for industrial use

Trends in coal and other energy consumption7


consumption for industrial use, plummeted in the first quarter of 2011 owing to a

surge in inventory from a decrease in pig iron shipment. It recorded a year-on-year

decrease of 15.1% to stand at 6,240 thousand tons.

- Bituminous coal consumption for steel making recorded high growth in the first half

of 2010, thus leading an overall rise in coal consumption. However, the level of

increase has been slowing down after the first quarter of 2010.

Rate of increase in bituminous coal consumption for steel making: (First half of 2010)

45.0% ⇒ (Second half of 2010) 4.3% ⇒ (First quarter of 2011) -15.1%

Notes: Pig iron sales are based on domestic sales.Source: Korea Iron & Steel Association (steeldata DB), Monthly Report on Energy Statistics

In the first quarter of 2010, bituminous coal consumption in the cement industry

recorded a year-on-year increase of 12.1% owing to anticipations of recovery of the

construction business. It continued a downward trend afterwards. However, it posted

growth of 13.4% in the first quarter of 2011 to reach 1,052 thousand tons.



[DiagramⅡ-31] Changes in the rate of increase in pig iron and bituminous coal for steel making


Notes: Values in parentheses are the year-on-year growth rate (%)Source: Korea Iron & Steel Association (steeldata DB), Monthly Report on Energy Statistics

- Bituminous coal consumption in the cement industry rose in the first quarter of

2011 because the import price of bituminous coal, which accounts for

approximately 30% of cement production costs, is continually going up, and

cement manufacturers are importing more bituminous coal before import prices go

up further13).

In the first quarter of 2011, bituminous coal consumption for power generation

posted a year-on-year rise of 2.4% to reach 19,634 thousand tons.

- No new bituminous coal-based power generation facilities were built after the

construction of Yeongheung Thermal Power Plant Unit 4 and Hadong Thermal Power

Plant Unit 8 in 2009. However, existing facilities were used at the maximum level.

Anthracite consumption marked a year-on-year drop of 2.3% and 36.5%,

respectively, in the residential/commercial and power generation sectors, but posted



(Unit: 1,000 tons, %)


1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Pig iron 5,785 6,468 7,300 7,732 27,284 8,266 8,788 8,411 9,600 35,065 10,240production (-25.4) (-17.0) (-7.7) (2.0) (-12.1) (42.9) (35.9) (15.2) (24.2) (28.5) (23.9)

Pig iron 71 71 71 76 290 84 99 67 73 324 73shipment (-35.0) (-37.1) (-30.9) (-23.4) (-31.9) (17.7) (39.8) (-5.4) (-4.3) (11.7) (-13.1)

Pig iron 164 113 110 72 72 82 203 155 195 195 290inventory (24.7) (8.8) (9.3) (-38.3) (-84.1) (-50.1) (80.2) (40.4) (172.1) (172.1) (253.7)

Consumptionof bituminous 4,551 4,783 5,565 5,835 20,734 7,354 6,176 5,810 6,084 25,424 6,240coal for steel (-21.6) (-18.8) (-5.8) (-2.2) (-12.0) (61.6) (29.1) (4.4) (4.3) (22.6) (-15.1)

making

<TableⅡ-14> Pig iron production, shipment, and inventory, and bituminous coal consumption for steel making

13) Coal statistics are based on domestic import statistics. As such, changes in statistics may be somewhatdifferent from economic conditions according to the industry’s inventory and production activity conditions inthe short term.


a year-on-year rise of 20.4% in the industrial sector, which takes up a high

percentage of anthracite consumption. Overall, anthracite consumption recorded a

year-on-year rise of 10.5% to reach 2,806 thousand tons.

- Anthracite consumption for residential/commercial use turned around and posted

an increase in the second half of 2010 because of abnormally low temperatures. It

has been on a downward trend afterwards. Anthracite consumption for industrial

use, which is used as fuel for co-generation, has been on an upward trend since

the fourth quarter of 2010.




(Unit: 1,000 tons)


1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Anthracite2,572 1,870 2,590 2,744 9,777 2,540 2,463 2,265 2,836 10,105 2,806(-6.5) (-22.4) (18.2) (-4.2) (-4.3) (-1.3) (31.7) (-12.6) (3.4) (3.4) (10.5)

Residential, 618 206 229 888 1,941 563 236 219 842 1,860 550commercial (-40.0) (66.1) (3.6) (-2.8) (-15.2) (-8.9) (14.6) (-4.4) (-5.2) (-4.2) (-2.3)

Industrial1,620 1,348 2,008 1,499 6,476 1,758 2,045 1,834 1,768 7,406 2,117(36.4) (-24.1) (33.7) (-0.1) (8.5) (8.5) (51.7) (-8.7) (18.0) (14.4) (20.4)

Power 334 316 353 357 1,360 219 182 212 226 839 139generation (-37.3) (-38.2) (-24.6) (-20.3) (-30.6) (-34.4) (-42.4) (-39.9) (-36.7) (-38.3) (-36.5)

Bituminous 22,378 23,210 26,592 26,422 98,602 28,118 25,256 27,870 28,159 109,413 27,615coal (0.5) (2.2) (6.3) (10.0) (4.9) (25.6) (8.8) (4.8) (6.6) (11.0) (-1.8)

Steel 4,551 4,783 5,565 5,835 20,734 7,354 6,176 5,180 6,084 25,424 6,240manufacturing (-21.6) (-18.8) (-5.8) (-2.2) (-12.0) (61.6) (29.1) (4.4) (4.3) (22.6) (-15.1)

Cement828 1,354 1,109 1,172 4,463 928 1,139 932 1,051 4,059 1,052(-24.8) (-4.2) (-15.0) (-17.3) (-14.8) (12.1) (-15.9) (-16.0) (-10.3) (-9.1) (13.4)

Other 610 527 552 625 2,314 665 592 559 661 2,478 689industries (-7.1) (-7.5) (-1.9) (4.2) (-3.1) (9.0) (12.4) (1.3) (5.8) (7.1) (3.6)

Power 16,389 16,546 19,366 18,790 71,091 19,171 17,349 20,569 20,363 77,452 19,634generation (11.5) (11.5) (12.4) (17.3) (13.2) (17.0) (4.9) (6.2) (8.4) (8.9) (2.4)

Coal24,950 25,080 29,182 29,166 108,378 30,659 27,720 30,135 30,996 119,517 30,402(-0.3) (-0.1) (7.3) (8.6) (4.0) (22.9) (10.6) (3.3) (6.3) (10.3) (-0.8)

<TableⅡ-15> Trends in coal consumption


B. Trends in consumption of thermal energy, new & renewable energy, and other energy

Thermal energy consumption indicated year-on-year growth of 10.8% in 2010. It

recorded a year-on-year rise of 5.5% in the first quarter of 2011 to reach 849 thousand

TOE.

The amount of consumption is steadily rising despite a slight slowdown in the

dissemination of district heating, a result of the sluggish construction business. This is

due to influence from the cold wave in the winter and an economic upturn.

Tentative figures indicate that consumption of new & renewable energy and other

energy recorded a year-on-year rise of 3.7% in 2010. It is presumed that consumption

posted a year-on-year increase of 10.6% to reach 1,324 thousand TOE in the first

quarter of 2011.




(Unit: 1,000 TOE)

Quarter2009 2010p 2011p

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual 1/4

Thermal 716 203 89 542 1,550 805 254 93 566 1,718 849(-2.3) (3.4) (5.3) (8.8) (2.5) (12.3) (25.2) (4.0) (4.4) (10.8) (5.5)

New & renewable 1,154 1,188 1,134 1,391 4,867 1,197 1,232 1,176 1,143 5,047 1,324

energy/ (3.9) (1.4) (1.6) (3.1) (2.5) (3.7) (3.7) (3.7) (3.7) (3.7) (10.6)Other energy

<TableⅡ-16> Trends in consumption of thermal energy, new & renewable energy, and other energy


ChapterⅢ

Energy Demand Outlook for 2011

1. Outlook on the international energy market

2. Domestic economic outlook and outlook assumptions

3. Outlook on primary energy demand

4. Outlook on final energy demand

5. Outlook on petroleum product demand

6. Outlook on electricity demand

7. Outlook on LNG and town gas demand

8. Outlook on coal and other energy demand

9. Characteristics and implications


A. Outlook on global oil supply and demand

In the May 2011 issue of the “Oil Market Report”, IEA forecasted that global oil

demand in 2011 will be roughly 89.2 million b/d, a year-on-year rise of around 1.3

million b/d.

Forecasted global oil demand was decreased 200 thousand b/d from the previous

month’s forecast as it is expected that high oil prices will continue and the economies

of advanced nations will be weak.

In 2011, non-OPEC supply and OPEC NGL supply are forecast to be around 53.7

million b/d and 5.8 million b/d, a year-on-year rise of approximately 800 thousand b/d

and 500 thousand b/d, respectively.

Demand for OPEC oil in 2011 is forecast to be around 29.7 million b/d, which is a 100

thousand b/d decrease from the previous month’s forecast.

Notes: Asia* refers to Asian developing countries excluding ChinaSource: IEA, Oil Market Report, May issue

ChapterⅢ Energy Demand Outlook for 2011


Outlook on the international energy market1

(Unit: Million b/d)

CategoryYear 2010Year

2009Year 2011

1/4 2/4 3/4 4/4 Annual average 1/4 2/4 3/4 4/4 Annual

average

OECD 45.6 45.9 45.2 46.6 46.8 46.1 46.0 44.9 46.2 46.5 45.9

North America 23.3 23.6 23.8 24.0 24.0 23.9 23.6 23.5 24.0 23.8 23.7Europe 14.6 14.2 14.1 14.8 14.7 14.4 14.0 14.0 14.6 14.6 14.3

Asia Pacific 7.7 8.2 7.3 7.6 8.0 7.8 8.3 7.4 7.6 8.1 7.9

Non OECD 39.5 40.5 41.8 42.1 42.7 41.8 42.4 43.3 43.7 43.7 43.3China 8.1 8.6 9.1 8.9 9.7 9.1 9.6 9.7 9.6 9.9 9.7Asia* 9.8 10.2 10.3 9.9 10.4 10.2 10.5 10.7 10.3 10.7 10.5

World 85.1 86.4 87.0 88.7 89.4 87.9 88.4 88.2 89.9 90.2 89.2

<TableⅢ-1> IEA’s global oil consumption figures and forecasts


B. International oil price outlook

International oil prices (Dubai) are expected to record an annual average $102.61, a

year-on-year rise of 31.3%, in tandem with continued global economic recovery and

the resulting steady rise in oil demand.

Source: Internal data of the Korea Energy Economics Institute

Major international organizations forecast that oil prices will be around $109.59/barrel

(Dubai oil), a year-on-year increase of 40%, in 2011, and $109.31/barrel in 2012,

similar to what was recorded in 2011.

Notes: CGES: Center for Global Energy Studies (London)CERA: Cambridge Energy Research AssociatesEIA: US Energy Information AdministrationPIRA: PIRA Energy Group



(Unit: $/Bbl)

Category2011

20102012

1/4 2/4 3/4 4/4 Annual average 1/4 2/4 3/4 4/4 Annual

average

CGES Brent(D) 79.9 106.0 118.2 124.0 130.4 119.7 - - - - -

Dubai 78.03 100.48 118.10 111.68 108.12 109.59 107.57 108.16 109.69 111.83 109.31CERA Brent(D) 79.46 104.96 122.33 114.17 109.83 112.82 109.97 111.43 112.89 114.35 112.16

WTI 79.38 93.97 110.00 102.17 100.00 101.53 101.97 103.43 104.89 106.35 104.16

EIA WTI 79.40 93.50 104.14 104.00 106.00 101.97 107.00 106.00 107.00 108.00 107.00

PIRABrent 79.45 104.95 117.60 118.50 123.85 116.20 - - - - -WTI 79.40 94.95 105.00 108.65 111.15 104.70 - - - - -

<TableⅢ-3> Oil price outlook of major overseas organizations in March

(Unit: $/Bbl)

Scenario 20102011

1/4 2/4 3/4 4/4 AnnualBase oil price 107.60 103.05 98.95 102.61

High oil price 78.13 100.84 115.91 120.42 125.56 115.68

Low oil price 94.78 84.83 81.21 90.42

<TableⅢ-2> Oil price outlook for 2010 and 2011 (Dubai oil)


C. Outlook on the international natural gas market

In 2011, international natural gas demand is forecast to post an increase of 3.0% to

reach 3,264.7 billion m3.

Global natural gas demand is expected to go up as a result of strong oil prices and

efforts made by countries to bring down CO2 emissions.

Natural gas consumption is expected to increase because of a reduction in the

nuclear power plant operation rate of OECD countries and a sharp rise in LNG

demand in Asia, including Japan and China.

In 2011, international natural gas production is forecast to stand at around 3,259.7

billion m3, a year-on-year rise of 3.2%.

Increased production of natural gas is expected in the Middle East and South Africa,

but excessive supply and relatively low prices will likely lead to a slight slowdown in

the increase rate compared to the previous year.

The US is increasing its share of internally-procured natural gas through the

development of unconventional gas. It is expected to gain an upper hand in the price

competition and lead LNG exports.




(Unit: Billion m3)

Category 2010 2011e

North America 828.0 837.1

East Europe 616.4 626.9

West Europe 586.6 604.2

Asia / South Pacific Islands 534.5 561.2

Middle East 372.3 396.4

Latin America 128.2 130.9

Africa 104.7 107.9

Worldwide 3,170.6 3,264.7(4.9) (3.0)

<TableⅢ-4> International natural gas consumption and outlook



In 2011, the natural gas price (Henry Hub) in the US is forecast to be US$ 4.55/mBtu,

a year-on-year increase of 3.6%.

Natural gas prices are expected to go up owing to low investments, a result of low

prices, and strong global gas demand.

In 2011, the natural gas price in Europe is forecast to reach US$ 9.36/mBtu, a rise of

13.0%.

An increase in prices is expected as LNG that is to be supplied to Europe goes to

Japan and the price gap between the spot market and long-term contracts

decreases.

In 2011, the LNG price in Japan is expected to be US$ 11.98/mBtu, a year-on-year

rise of 10.4%.

The price is expected to go up in tandem with a rise in LNG demand for power

generation as a replacement for the Fukushima Daiichi Nuclear Power Plant as well

as a continued increase in demand in Asia, including China.



(Unit: Billion m3)

Category 2010 2011e

North America 826.4 838.8

East Europe 782.3 793.4

West Europe 294.2 296.0

Asia / South Pacific Islands 447.4 459.5

Middle East 448.4 501.8

Africa 205.9 210.2

Latin America 155.0 160.0

Worldwide3,159.6 3,259.7(4.8) (3.2)

<TableⅢ-5> International natural gas production and outlook


Notes: The natural gas price in the US is based on the Henry Hub. The price in Europe (excluding the UK) is the importborder price. The price in Japan is the LNG import price.


Notes: The natural gas price in the US is based on the Henry Hub. The price in Europe (excluding the UK) is the importborder price. The price in Japan is the LNG import price.




(Unit: US $/mBtu)

Category2010 2011

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

US 5.15 4.32 4.28 3.80 4.39 4.18 4.40 4.60 5.00 4.55

Europe 8.84 7.51 8.26 8.54 8.29 9.45 9.40 9.00 9.60 9.36

Japan 10.32 10.95 11.22 10.91 10.85 12.05 12.15 11.60 12.10 11.98

<TableⅢ-6> Outlook on international natural gas prices

[DiagramⅢ-1] Outlook on international natural gas prices


D. Outlook on the international coal market14)

Asia, including China and India, has recently been triggering a rise in international coal

prices. Demand for coal import in Asia is expected to continually increase.

In its 12th five-year plan, China emphasized balanced development, leading to

forecasts that the country’s economic growth will somewhat slow down. However,

an increase in coal imports will likely be unavoidable to resolve the issue of electricity

shortage.

India plans to build and operate coal power plants with a total capacity of 100GW.

Due to lack of domestic resources, however, it has to depend on imports to meet

most of its coal requirement (AME, 2011).

Korea and Japan are indicating gradual growth in imports. In the case of Japan,

however, the nuclear power plant incident led the country to raise coal power plant

usage, resulting in a high possibility of a greater increase in imports.

Export countries are expected to increase supply, including Australia, Indonesia, the

Republic of South Africa, Columbia, and Russia.

Australia is working on adding its coal production capacity by a total 380 million tons,

of which 300 million tons will be actually added by 2014. As such, the country’s total

production capacity is expected to reach 600 million tons (IEEJ, 2010).

There is an extremely high possibility of increased coal exports as a result of

Indonesia’s steady expansion of coal production, the Republic of South Africa’s coal

terminal expansion, Russia’s Muchka Bay development in the Far East, and the

Columbian government’s efforts to increase coal production.

International prices of thermal coal indicate clear price coupling effects with other

primary products. They are expected to become stabilized in 2011.



14) For this chapter, information provided in the ‘International Steam Coal Price Trends and Outlook’section ofthe 「Global Energy Market Insight (Volume 11-12)」was extracted and organized.


Improvements in supply/demand conditions in tandem with a rise in temperature

levels and restoration of coal facilities in export countries, the strong dollar, and

decreased demand for import in Japan are serving to bring down prices.

Considering the price coupling effect, an additional rise in crude oil prices will serve to

increase steam coal prices.

Notes: Values in parentheses indicate the year-on-year growth rateSource: EIU, World commodity forecasts: Industrial raw materials, June 2011

A. Outlook on the domestic economy15)

Economic growth rate

According to recent forecasts, the Korean economy is expected to maintain an

increase in exports, based on growth of the global economy, in 2011. Domestic

demand is also expected to continually rise. The Korean economy is forecast to

record growth of 4.2%.



Domestic economic outlook and outlook assumptions2

(Unit: US $/1,000 tons)

Category2011

Annual1/4 2/4 3/4 4/4

Coal price 129.6 122.0 115.0 110.1 119.2(Australian Thermal Coal) (20.8)

<TableⅢ-7> Outlook on international coal prices for 2011

15) Referred to the 「KDI Economic Outlook」(May 2011) of the Korea Development Institute.


- The Korean economy will likely remain on the path of recovery. The economic

growth rate (6.2%, tentative) recorded in 2010 was relatively high due to base

effects from the financial crisis recovery phase. This year’s economic growth rate is

expected to be lower.

- The economic growth rate in the second half of 2011 (4.5%) is forecast to be higher

than that recorded in the first half of the year (3.9%) owing to base effects.

Private consumption

Private consumption is expected to continue growth in the mid to high 3% range as

a result of an upswing in overall economic conditions such as income levels and

employment.

- In 2011, the rate of increase in consumption is forecast to be 3.5%, which is slightly

lower than the GDP increase rate, as real purchasing power deteriorates as a result

of a rise in oil prices, notwithstanding improvements in household income levels and

employment.

Investments

Facility investments are forecast to maintain a comparatively high level of increase

based on good profitability levels recorded by corporations and a high rate of

operation.

- In 2011, facility investments are forecast to record sound growth of 6.9% against

the backdrop of reduced capital goods import costs in tandem with a rise in the

value of the Korean won and an increase in demand at home and abroad.

Recovery of construction investments is expected to be delayed, attributable to a

slump in the housing market as well as worsened financial conditions and

restructuring of construction companies.

- In 2011, construction investments are forecast to go down 0.9% with a delay in the

recovery of the housing sector, despite increased demand from the economic

recovery and a decrease in unsold houses, amid decreased investment capacity in

the public sector.




Notes: 1) Preliminary figures 2) Fresh estimates

Source: Korea Development Institute, KDI Economic Outlook (First half of 2011), May 2011

Exports, imports, and current account

Product exports (quantity) are forecast to record high growth of 12.8% as economic

recovery of advanced countries steadily expand, amid continued sound growth of

emerging markets.

- Product imports (quantity) are forecast to post a rate of increase of 12.1% in 2011,

incorporating a rise in exports and domestic demand.

The current account surplus is expected to steadily decrease due to the reflection of

a rise in domestic demand, the strong Korean won, and an increase in international

oil prices.

- The current account surplus is forecast to steadily decrease and stand at 11.2

billion dollars in 2011, as a result of a decrease in the goods account surplus,



(Year-on-year comparison, %, 100 million dollars)

Category2010 2011

Annual1) 1/42) 2/4 3/4 4/4 Annual

GDP 6.2 4.2 3.6 4.2 4.9 4.2

Total consumption 3.9 2.7 4.0 3.4 4.5 3.6- Private consumption 4.1 3.0 3.5 3.2 4.2 3.5

Total fixed capital investment 7.0 -2.2 -0.1 3.6 6.7 2.3- Facility investment 25.0 12.0 4.8 3.2 8.2 6.9

- Construction investment -1.4 -11.9 -3.6 3.7 5.8 -0.9

Exports of goods (quantity) 15.8 18.6 11.0 11.1 11.5 12.8Imports of goods (quantity) 18.2 13.3 10.7 11.3 13.0 12.1

Current account 282.0 27.0 33.0 26.0 26.0 112.0

- Goods account balance 419.0 59.0 78.0 71.0 57.0 265.0- Service balance,primary income balance, -137.0 -32.0 -44.0 -45.0 -31.0 -153.0secondary income balance

Consumer price 2.9 4.5 4.3 4.3 3.3 4.1

Unemployment rate 3.8 4.2 3.4 3.2 3.2 3.5

<TableⅢ-8> Economic outlook for 2011


attributable to the strong won and a rise in oil prices, and a rise in the service

account deficit.

Consumer price

The rate of increase in consumer prices is forecast to remain high for the time being

owing to inflationary pressure on the supply side, including a rise in oil prices, and

inflationary pressure on the demand side as a result of continued growth.

Unemployment rate

The unemployment rate will continue to improve, thanks to continued economic

growth. It is forecast to mark an annual average 3.5% in 2011.

- In 2011, the labor force participation rate will likely go up as economic recovery

continues. The number of the employed is expected to go up by more than 300

thousand mainly in the private sector.

Outlook on the domestic economy by major organizations

According to economic outlook data recently announced by major organizations in

Korea, the nation is forecast to record an economic growth rate that is in the low 4%

range in 2011.

- Economic growth forecasts made by such government-run organizations as KDI

and private research institutes are similar.

Consumer prices are expected to rise by around 4%.

The current account surplus is forecast to be around 12 billion dollars, which is a

substantial drop from 2010 (28.2 billion dollars). Private research institutes, such as

the Samsung Economic Research Institute and LG Economic Research Institute,

have more optimistic forecasts on the surplus.




Source: Korea Development Institute, KDI Economic Outlook (First half of 2011), May 2011The Bank of Korea, Economic Outlook for 2011 (Revised), April 2011Korea Institute of Finance, Revised Economic Outlook for 2011, April 2011 Samsung Economic Research Institute, Outlook on Global Economy and Korean Economy for 2011, SERIEconomic Outlook, April 2011LG Economic Research Institute, Economic Outlook for 2011, LG Business Insight, April 2011

B. Temperature assumption

Average temperature information for the last 20 years was used for temperature

variables used in the forecasts such as CDD (Cooling Degree Days) and HDD (Heating

Degree Days).

Notes: 1) Figures from January through April are actual figures.2) CDD (HDD) refers to the difference between the daily average temperature and standard temperature if the dailyaverage temperature is higher (lower) than the standard temperature (18℃). Monthly CDD/HDD is the sum ofdaily degree days in the month.



(Unit: %)

Category KDIThe Bankof Korea

KoreaInstitute ofFinance

SamsungEconomicResearchInstitute

LGEconomicResearchInstitute

Economic Growth rate 4.2 4.5 4.4 4.3 4.1

Consumer price increase rate 4.1 3.9 4.2 4.1 3.8

Current account (100 million dollars) 112 110 120 176 153

Unemployment rate 3.5 3.6 - 3.6 3.7

<TableⅢ-9> Economic outlook by major organizations in Korea

Category2011

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Average -7.2 1.2 3.6 10.7 18.0 22.4 25.1 25.7 21.5 14.9 7.5 0.8temperature

CDD 0 0 0 0 34 135 220 240 110 8 0 0

HDD 781 470 446 218 33 1 0 0 5 104 318 538

<TableⅢ-10> Assumptions on temperature variables


In 2010 and the first quarter of 2011, abnormal climate conditions continued,

including low temperatures in the winter and high temperatures and high humidity in

the summer. It is assumed, however, that average year temperatures will be

maintained from the second through the fourth quarter of 2011.

- The abnormal climate that continued throughout 2010 served to increase energy

demand in 2010.

- The average temperature in January, in the first quarter of 2011, was -7.2℃, a 5.4

℃ drop from the twenty-year average.

Primary energy demand in 2011 is expected to reach 269.9 million TOE, a year-on-

year rise of 3.5%.



[DiagramⅢ-2] Changes in CDD and HDD and assumptions for outlook

Outlook on primary energy demand3


The level of increase in primary energy demand is forecast to slow down this year

due to several factors: a decrease in the economic growth rate (6.2% in 2010 →

4.2% in 2011), removal of temperature effects resulting from an assumption that

average year temperatures will be recovered from the second through the fourth

quarter, and base effects from high growth in consumption in 2010.

Notes: 1) Values in parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to estimates2) LNG consumption includes the estimated directly-adopted volume of POSCO and K-POWER



Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Coal 30.7 27.7 30.1 31.0 119.5 30.4 28.1 30.6 31.7 120.9(Million ton) (22.9) (10.6) (3.3) (6.3) (10.3) (-0.8) (1.5) (1.6) (2.3) (1.1)

-Excluding 23.3 21.6 24.3 24.9 94.1 24.2 21.8 24.4 25.1 95.6coking coal (14.2) (6.2) (3.0) (6.8) (7.4) (3.8) (1.3) (0.3) (0.9) (1.6)

Oil 198.8 193.5 192.1 210.1 794.5 205.0 196.2 193.7 212.0 806.8(Million bbl) (-0.1) (0.5) (4.6) (3.4) (2.1) (3.1) (1.4) (0.8) (0.9) (1.5)


LNG 10.7 6.5 5.5 9.4 32.0 12.0 7.1 6.0 10.1 35.3(Million ton) (25.0) (39.8) (20.2) (11.8) (22.6) (12.7) (10.1) (10.2) (7.7) (10.3)

Hydro 1.2 1.6 2.3 1.5 6.6 1.5 1.6 2.5 1.5 7.1(TWh) (48.0) (10.5) (-7.9) (66.5) (16.4) (21.4) (1.2) (8.4) (5.2) (8.4)

Nuclear power 36.0 36.5 37.6 37.8 147.8 36.0 38.1 40.7 40.7 155.5(TWh) (-1.6) (-2.3) (0.9) (3.2) (0.0) (0.0) (4.4) (8.5) (7.8) (5.2)

Other 1.4 1.4 1.3 1.6 5.7 1.5 1.5 1.4 1.8 6.1(Million TOE) (3.7) (3.7) (3.7) (3.7) (3.7) (10.8) (6.1) (6.1) (8.0) (7.8)

Primary energy 68.9 61.0 61.3 69.5 260.8 71.5 63.0 63.4 71.9 269.9(Million TOE) (10.3) (7.3) (5.3) (5.8) (7.2) (3.7) (3.2) (3.4) (3.5) (3.5)

Primary energy 53.4 46.2 46.6 54.3 200.5 55.8 47.5 48.0 56.0 207.3-Excludingfor raw (9.2) (6.7) (5.4) (6.3) (7.0) (4.4) (2.7) (2.9) (3.2) (3.4)materials

<TableⅢ-11> Outlook on primary energy demand


Primary energy demand in 2011, excluding energy for raw material use (naphtha,

coking coal), is expected to go up 3.4% from the previous year.

- In 2011, energy demand for raw material use will likely go up 3.9%, indicating

relatively quick growth.

- Favorable conditions in the oil and chemical industries are expected to continue,

resulting in forecasts that naphtha consumption for raw material use will rise by 5.7%.

Consumption of coking coal is expected to become stabilized with the reflection of

base effects from a high rise in consumption witnessed in the previous year.

Forecasts on key energy indicators

The energy intensity (TOE/million won) deteriorated to 0.250 in 2010, after worsening

in 2009 as well. However, it will likely improve to 0.248 in 2011.

- The deterioration of the energy intensity in 2009 is a result of a 1.1% rise in primary

energy consumption, a result of the operation of new facilities in industries that

consume large amounts of energy, against the backdrop of a considerable

slowdown (0.3%) in the growth rate owing to the financial crisis.16)



[DiagramⅢ-3] Forecasts on the economic growth rate and primary energy increase rate


- The worsened intensity in 2010 mainly resulted from a soar in energy consumption

for industrial use, owing to a favorable turn in the economy and base effects, as well

as a rise in energy consumption for cooling and heating purposes resulting from

abnormal weather in the winter and summer.

- It seems like the worsening of the energy intensity in 2009 and 2010 is temporary,

and that improvements will take place in 2011 and onwards.

Per-capita energy consumption rose from 4.99TOE in 2009 to 5.34TOE in 2010, and

is expected to post 5.51TOE in 2011.


Forecasts on primary energy demand by energy source

In 2011, coal demand is expected to show gradual growth of 1.1%, attributable to a

slowdown in coal consumption for power generation (no new facilities), sluggishness

in the cement industry, and base effects from a high increase in coking coal

consumption in the previous year.

- Coal demand, excluding coking coal, is expected to record an increase rate of

1.6%, higher than the overall coal demand increase rate, attributable to a rise in



Category 2005 2006 2007 2008 2009 2010p 2011e

Economic growth rate (%) 4.0 5.2 5.1 2.3 0.3 6.2 4.2



Per capita consumption (TOE) 4.75 4.83 4.88 4.95 4.99 5.34 5.51

<TableⅢ-12> Key indices related to energy consumption

16) There is a certain level of energy consumption that is essential for basic economic activities. This is why therange of fluctuation in energy consumption is generally smaller than the range of fluctuation of the economy.As such, the energy consumption increase rate is higher than the economic growth rate in case of aneconomic recession, while the opposite frequently occurs in case of a booming economy.


consumption of anthracite for industrial use (7.9%).

In 2011, oil demand is expected to reach 806.8 million barrels, a year-on-year rise of

1.5%, owing to a rise in oil demand for industrial use as a result of the economic

recovery, despite continued high oil prices.

- Oil demand for industrial use is expected to indicate relatively high growth (2.1%) as

a result of increased consumption for raw material use, but the level of increase is

expected to decrease in comparison to 2010 owing to a decrease in demand for

heating purposes based on the assumption that average year temperatures will be

recovered.

- Petroleum product demand, excluding naphtha, will likely post a year-on-year drop

of 1.4%.

- An increase in demand (5.7%) for naphtha, which accounts for 41.7% of total oil

consumption (as of 2010), is expected to lead an increase in total oil consumption

in 2011.

In 2011, LNG demand will likely record high growth of 10.3% compared to the

previous year. LNG demand for power generation, which accounted for 44% of

overall consumption in 2010, is expected to rise 16.0%, thus leading an overall



[DiagramⅢ-4] Forecasts on energy intensity and per capita consumption


increase in LNG demand.

- Demand for LNG for power generation, which is used to handle peak load, is

forecast to record relatively high growth as it is expected that there will be

restrictions on the expansion of capacity of base-load power generation facilities

such as those for nuclear energy and bituminous coal and a high rise in electricity

demand.

- There may be a shortage in LNG supply in the event of abnormal weather that was

witnessed in the previous year such as abnormally low temperatures in the winter

and abnormally high temperatures in the summer. There is therefore a need to take

continuous interest in electricity demand management policies to ensure stability in

energy supply and demand.

The amount of nuclear power generation is forecast to record a year-on-year rise of

5.2% as new facilities are planned for operation in 2011, the first after 2005.

- There will likely be a rate of increase in the low 5% range as a result of effects of

facility expansion (approximately 5.5% increase is assumed)17) from the operation of

Singori Units 1 and 2.

Forecasts on percentage of total consumption taken up by each energy source

The percentage of total consumption taken up by oil decreased to less than 50% in

2002, and continued to go down to stand at 40.0% in 2010 (tentative figure). The

percentage occupied by oil is expected to go down further in 2011 to indicate

39.3%.

The percentage of total consumption occupied by coal continually increased from

23.0% in 2001 to 29.1% in 2010, gaining strength from a steady rise in coking coal

consumption for industrial use and consumption for power generation.



17) Singori Units 1 and 2 are Korea’s 21st and 22nd nuclear power plants. Commercial operation of Singori Unit1 commenced on February 28, 2011. Construction of Singori Unit 2 is expected to be completed inDecember. The total facility capacity of Singori Units 1 and 2 is 2,000MW, which accounts for 11.3% of thenuclear power plant capacity (17,716MW) recorded at the end of 2010. However, completion of constructionof Singori Unit 2 is scheduled for the end of December. Production of electricity through actual pilotoperations will likely be possible in the second half of the year.


- The percentage will likely indicate a downward trend in 2011 (28.5%) for the first

time in the 2000s, owing to no additional construction of bituminous coal-based

power generation facilities and a slowdown in the level of increase in demand for

industrial use.

The share occupied by LNG has been continually rising in tandem with a steady rise

in demand for power generation, resulting from restrictions on the expansion of base-

load power generation facilities.

- The share occupied by LNG is expected to rise to 17.0% in 2011 because not

enough base-load power generation facilities will be built to address the increase in

electricity demand.

The share of primary energy occupied by nuclear power went up to 16.1% in 2005,

and then continued a downward trend as no facility expansions took place through

2010.

- The share occupied by nuclear power is expected to be 12.4% in 2011, a year-on-

year rise of 0.2%p, as a result of the construction of Singori Units 1 and 2

(2,000MW).



[DiagramⅢ-5] Share of primary energy demand taken up by each energy source


Forecasts on level of contribution made by each final energy source to primary energy

demand

Regarding the level of contribution of each final energy source to the increase in

primary energy consumption, the level of contribution made by electricity, which

triggers energy consumption for power generation, is forecast to rise from 46.3% in

2010 to around 54.6% in 2011.

The level of contribution of demand for industrial raw material use is expected to

slightly drop from 26.0% in 2010 to 25.5% in 2011 as a result of a slowdown in

coking coal consumption.

Based on the assumption that there will be a slowdown in economic growth and

average year temperatures will be recovered in 2011, town gas demand for industrial

use and heating purposes is expected to slow down. The level of contribution of

town gas to an increase in primary energy demand is forecast to decrease from

15.7% in 2010 to 14.3% in 2011.

Petroleum products for fuel, excluding naphtha, are expected to record a decrease in

consumption (-1.3%) in 2011, thus contributing to reducing primary energy demand by 8.4%.



[DiagramⅢ-6] Forecasts on level of contribution of each energy source to increase in primary energy


Final energy demand is forecast to record a year-on-year increase of 3.1% in 2011 to

reach 200.2 million TOE.

Consumption soared in the industrial sector and residential/commercial/public sector

in 2010, but the level of consumption increase is expected to considerably slow

down in 2011 due to base effects. The transport sector will likely indicate an increase

rate similar to the previous year.

In 2011, consumption in the industrial sector is expected to record sound growth of

3.9% despite base effects from a substantial rise in consumption in 2010.

- The rate of increase in demand is forecast to be 4.0%, when excluding energy for

raw material use (naphtha/coking coal), which is slightly higher than the overall

increase rate. This results from forecasts that electricity for industrial use (8.7%) and

town gas (8.6%) will maintain high growth in 2011.

In 2011, energy demand in the transport sector is expected to mark an increase rate

of 2.3%, which is similar to the previous year, attributable to a rise in new car sales

and overseas traveling, a result of continued economic recovery, and an increase in

demand for international freight transport, despite high oil prices.

The residential/commercial/public sector will likely indicate a substantial slowdown in

the demand increase rate at 1.8% in 2011. This is because of base effects as it is

assumed that average year temperatures will be recovered as well as a slowdown in

the level of increase in income levels.



Outlook on final energy demand4


Notes: Values in parentheses are the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts



Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Industry 28.9 28.3 27.6 29.7 114.5 29.7 29.5 28.7 31.0 119.0(Million TOE) (13.8) (8.5) (3.8) (5.9) (7.9) (2.8) (4.2) (4.0) (4.6) (3.9)

-Excluding for 13.4 13.5 12.9 14.5 54.3 14.0 14.0 13.3 15.1 56.4raw materials (13.3) (7.8) (2.6) (8.0) (7.9) (4.6) (3.7) (2.8) (4.6) (4.0)

Transport 8.5 9.2 9.5 9.6 36.8 8.8 9.4 9.7 9.8 37.6(Million TOE) (0.8) (1.9) (4.2) (2.8) (2.4) (3.2) (1.9) (2.0) (2.1) (2.3)

Residential/commercial 14.9 8.8 7.3 11.8 42.8 15.3 8.9 7.4 11.9 43.5/public

(Million TOE) (7.5) (11.0) (6.7) (3.4) (6.9) (2.7) (0.9) (2.6) (0.7) (1.8)

Total 52.3 46.4 44.3 51.1 194.1 53.8 47.8 45.8 52.7 200.2Million TOE (9.7) (7.6) (4.4) (4.7) (6.6) (2.8) (3.1) (3.3) (3.2) (3.1)

Total 36.8 31.5 29.6 35.9 133.9 38.1 32.3 30.4 36.8 137.6-Excluding for (7.8) (6.8) (4.1) (5.0) (6.0) (3.5) (2.4) (2.5) (2.6) (2.8)raw materials

Town gas 7.9 4.3 2.8 5.7 20.8 8.1 4.5 3.1 5.9 21.7(Billion m3) (14.5) (20.9) (6.1) (7.8) (12.6) (2.8) (4.6) (9.5) (4.4) (4.5)

Oil 189.0 187.8 187.0 204.2 768.0 194.7 190.4 188.6 206.0 779.6(Million bbl) (1.0) (0.9) (3.3) (3.2) (2.1) (3.0) (1.3) (0.9) (0.9) (1.5)


Electricity 112.5 103.6 109.1 109.0 434.2 121.4 110.6 114.8 115.4 462.2(TWh) (12.2) (10.3) (10.2) (7.7) (10.1) (7.9) (6.7) (5.3) (5.9) (6.5)

Coal 11.3 10.2 9.4 10.4 41.2 10.6 10.4 9.8 11.0 41.9(Million ton) (37.0) (24.1) (-1.2) (3.9) (14.7) (-5.5) (2.1) (5.1) (5.7) (1.6)

--Excluding 3.9 4.0 3.5 4.3 15.8 4.4 4.1 3.6 4.4 16.6coking coal (6.5) (17.1) (-9.1) (3.3) (4.0) (12.6) (1.7) (2.1) (2.7) (4.8)

Thermal and 2,001 1,486 1,269 2,009 6,765 2,173 1,609 1,390 2,192 7,364other

(Thousand TOE) (7.0) (6.8) (3.7) (3.9) (5.4) (8.6) (8.3) (9.5) (9.1) (8.9)

<TableⅢ-13> Outlook on final energy demand


In terms of each energy source, most energy sources will likely post a lower

consumption increase rate in 2011 compared to the previous year due to a slowdown

in economic growth and base effects from the assumption that average year climate

conditions will be recovered.

Town gas consumption went up 12.6% in 2010, owing to a surge in demand for

industrial use resulting from economic recovery and abnormally low temperatures.

However, the level of increase is expected to slow down to 4.5% in 2011.

- Town gas demand will likely rise, led by town gas demand for industrial use, as it is

expected that favorable conditions in the economy will continue in 2011.

- In terms of residential use, consumption is expected to slightly go down (-2.0%) as

a result of reflection of base effects resulting from a difference in climate conditions

with 2010, as the number of customers reaches a state of saturation, mainly in

large cities.

In 2011, oil consumption for industrial raw material use is expected to lead a rise in oil

demand.

- Oil demand for non-energy use and raw material use, including naphtha, solvent,

and asphalt, is expected to indicate a year-on-year rise of 2.1% owing to continued

favorable conditions in the economy and a rise in domestic ethylene production as

a result of influence from the Japanese earthquake.

- Oil consumption in the residential/commercial/public sector sharply went up due to

abnormally low temperatures in 2010. It is forecast to post a year-on-year drop of

4.0% in 2011 if average year climate conditions are recovered.

- Oil demand for transport is forecast to rise by 1.8%, attributable to strong demand

for gasoline and jet oil.

Electricity will likely indicate relatively high growth of 6.5% in 2011 resulting from

several factors: continued, sound economic growth, relatively low charge, continued

dissemination of equipment that use electricity, and convenience in use.

- In 2011, increase in demand for residential and commercial use is forecast to

substantially slow down. Demand for industrial use is expected to lead an overall

rise in demand.




- The level of increase in demand for industrial use is forecast to slow down with the

coming of the second half of the year. However, it is forecast that a substantial rise

in consumption from January through April (year-on-year comparison of 10.5%) will

be reflected to indicate an annual increase rate of 8.7%.

In 2011, coal consumption in the final sector is forecast to see an increase of 1.6%

owing to forecasts of decreased demand for cement production as well as stagnant

bituminous coal demand for steel making as a result of base effects.

- When excluding coking coal, final consumption of coal will likely post a year-on-year

increase of 4.8%, attributable to strong anthracite demand for industrial use.

Thermal energy is forecast to witness a slowdown in the consumption increase rate

at 4.5% in 2011. New & renewable energy is expected to post an increase rate of

approximately 10%, thanks to the government’s active implementation of

propagation policies.

Final energy consumption structure by sector

The share of energy consumption taken up by the industrial sector remained at

around 55% up until 2005, but continued to rise afterwards and will likely reach

59.5% in 2011.

- The increase in the share taken up by the industrial sector is a result of steady

growth of industries that consume large amounts of energy such as the steel and

petrochemical industries, as well as sharp growth in the fabricated metal industry,

which consumes a great amount of electricity.

The share of consumption occupied by the transport sector stood at 21.0% in 2006

but continued to decrease afterwards. It is expected to go down to 18.8% in 2011.

- The drop in the share of consumption occupied by the transport sector is the result

of a slowdown in the rate of increase in oil consumption for transport in tandem

with a sharp rise in international oil prices since 2003.




The share of consumption occupied by the residential/commercial/public sector,

where energy is mostly consumed for heating and cooling purposes, tends to go up

and down according to temperature fluctuations in the summer and winter.

- The percentage of consumption accounted for by the sector indicated a downward

trend up until the mid-2000s due to stagnant consumption in the residential sector.

However, consumption in the commercial sector increased quickly, thus resulting in

a share of approximately 22% since 2007. It is forecast to slightly decrease to

21.7% in 2011.

Final energy consumption structure by energy source

Oil’s share of final energy consumption steadily went down in the 2000s and is

expected to stand at 51.0% in 2011, a year-on-year drop of 0.8%p.

In contrast, all other energy sources are indicating a continuous upward trend in terms

of their share of consumption as a result of the decreased share taken up by oil.

In particular, electricity’s share of consumption is rising extremely quickly. Electricity’s

share of consumption is expected to reach around 20% in 2011.

- A rise in electricity consumption expands energy conversion loss, thus triggering a



[DiagramⅢ-7] Share of final energy demand occupied by each sector


rapid increase in primary energy consumption. Unlike other final energy sources, a

rise in electricity consumption incurs additional energy expenses at the national level.

- There is a need to identify various policy measures for efficient consumption of

electricity in order to curtail social costs that arise from a rise in electricity demand

and to stabilize national energy supply and demand.

The share of consumption occupied by town gas is steadily rising in the 2000s as

well, owing to a continued expansion in the number of customers and the

development of new areas of use such as for transport and cooling.



[DiagramⅢ-8] Share of final energy demand taken up by each energy source


In 2011, oil demand is expected to see a year-on-year rise of 1.5% to reach around

806.8 million barrels, attributable to a rise in demand for raw material use in the

industrial sector, a result of the economic recovery, despite continued high oil prices.

Notes: Values in parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts

Oil demand for transport is expected to post a year-on-year rise of 1.8%, attributable to

a rise in car sales, overseas traveling, and international freight, despite high oil prices.

Oil demand for feedstock in the industrial sector is expected to record a year-on-year

rise of 5.5% as it is forecast that there will be a substantial rise in domestic ethylene

production, due to influence from the Japanese earthquake as well as the economic

recovery.



Outlook on petroleum product demand5

(Unit: Million bbl)

Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Transport61.2 66.2 67.9 68.4 263.7 62.8 67.2 69.0 69.4 268.4(0.4) (1.6) (3.9) (2.2) (2.1) (2.6) (1.6) (1.6) (1.5) (1.8)

Industry107.8 109.1 109.3 115.8 442.1 110.9 111.9 110.6 117.9 451.4(0.6) (-0.7) (2.9) (3.8) (1.6) (2.9) (2.6) (1.2) (1.8) (2.1)

- Fuel20.2 18.9 19.2 22.4 80.7 16.6 16.9 16.3 20.5 70.3(0.1) (-12.2) (-4.7) (1.9) (-3.7) (-17.8) (-10.3) (-15.4) (-8.5) (-12.9)

- feedstock87.6 90.2 90.1 93.4 361.3 94.3 95.0 94.3 97.4 381.0(0.7) (2.1) (4.6) (4.3) (2.9) (7.6) (5.3) (4.7) (4.3) (5.5)

20.0 12.6 9.7 20.0 62.3 20.9 11.2 9.0 18.7 59.8(5.1) (13.3) (4.0) (2.6) (5.7) (4.7) (-10.6) (-7.8) (-6.7) (-4.0)

Transformation9.8 5.6 5.1 6.0 26.5 10.3 5.9 5.1 6.0 27.2

(-17.3) (-12.3) (92.2) (12.5) (1.0) (5.0) (4.0) (-0.0) (0.2) (2.7)

total Oil198.8 193.5 192.1 210.1 794.5 205.0 196.2 193.7 212.0 806.8(-0.1) (0.5) (4.6) (3.4) (2.1) (3.1) (1.4) (0.8) (0.9) (1.5)

<TableⅢ-14> Outlook on petroleum product demand by sector

Residential/commercial/

public


By product, naphtha is expected to lead a rise in oil demand. Demand for petroleum

products for transport, such as gasoline and diesel for transport is forecast to steadily

increase. In contrast, demand for kerosene, diesel, and heavy oil, which is used for

heating and industrial fuel, is forecast to drop by a great extent.

Notes: Kerosene+Diesel: Sum of diesel (excluding for transport), indoor kerosene, and boiler kerosene consumption Valuesin parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts



(Unit: Million bbl)

Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Gasoline 15.9 16.9 18.5 17.7 68.9 16.3 17.4 18.5 17.8 70.0(4.6) (2.8) (8.1) (3.1) (4.6) (2.8) (2.9) (0.2) (0.7) (1.6)

Diesel for 23.8 27.0 26.5 27.6 104.8 24.2 27.5 26.7 28.1 106.4transport (-0.2) (-0.3) (2.2) (1.2) (0.7) (1.6) (1.7) (0.9) (1.8) (1.5)

Kerosene+Diesel 17.9 11.0 10.4 19.9 59.2 18.7 10.1 8.8 17.7 55.3(7.8) (7.7) (19.9) (6.8) (9.3) (4.1) (-8.8) (-14.7) (-10.9) (-6.6)

Heavy oil 20.0 15.1 13.9 16.6 65.5 19.3 14.9 13.7 16.0 63.8(-16.2) (-12.0) (15.8) (0.7) (-5.6) (-3.1) (-1.4) (-2.0) (-3.8) (-2.7)

Naphtha 81.1 82.1 83.0 85.4 331.7 88.7 86.7 86.6 88.4 350.4(-0.3) (2.6) (5.1) (3.9) (2.8) (9.3) (5.6) (4.4) (3.5) (5.7)

LPG 26.5 26.2 25.5 27.0 105.2 24.6 23.8 23.6 26.4 98.4(1.3) (0.1) (-6.3) (0.8) (-1.1) (-7.0) (-9.1) (-7.7) (-2.1) (-6.4)

<TableⅢ-15> Outlook on demand for key petroleum products

(including for power generation)




Electricity demand is forecast to record a year-on-year increase of 6.5% in 2011 to

reach 462.2 TWh.

Electricity demand is expected to indicate high growth, despite base effects from the

assumption that average year temperatures will be recovered from the second

through the fourth quarter of 2011, due to several factors: continued, sound

economic growth, relatively low charge, increased propagation of electric equipment

and convenience in use.

Notes: 1) Values in parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts2) Commercial includes the service industry and for public use

A comparison between the economic growth rate and the rate of increase in

electricity demand indicates that the level of increase in electricity demand has been

higher than the economic growth rate since 2000 with the exception of 2006.

- In 2011, the GDP elasticity of total electricity consumption is expected to be 1.54

and the GDP elasticity of consumption for industrial use is expected to be 2.07. The

year 2006 is the only year when the GDP elasticity of total electricity consumption



Outlook on electricity demand6

(Unit: TWh)

Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Residential15.7 14.5 16.2 14.9 61.2 16.2 14.9 16.4 15.6 63.1 (5.3) (5.0) (11.3) (3.3) (6.2) (3.3) (2.7) (1.7) (4.9) (3.1)

Commercial42.7 34.2 37.0 36.0 149.8 45.1 36.0 38.3 37.2 156.5 (8.2) (7.7) (9.9) (4.7) (7.7) (5.7) (5.2) (3.6) (3.4) (4.5)

Industrial54.1 55.0 56.0 58.1 223.2 60.1 59.7 60.1 62.7 242.6 (17.8) (13.4) (10.0) (10.8) (12.9) (11.0) (8.6) (7.4) (7.8) (8.7)

Total112.5 103.6 109.1 109.0 434.2 121.4 110.6 114.8 115.4 462.2 (12.2) (10.3) (10.2) (7.7) (10.1) (7.9) (6.7) (5.3) (5.9) (6.5)

<TableⅢ-16> Outlook on electricity demand


was less than 1 in the 2000s.

- The level of increase in electricity consumption for industrial use showed similar

trends as the economic growth rate in the early 2000s. However, the level of

growth became prominent after 2007, and this trend will likely continue in 2011.

- In particular, there was a huge gap between the rate of increase in electricity

consumption and the economic growth rate in 2010, owing to favorable conditions

in industries that consume great amounts of electricity and expansion of facilities in

steel industries.




Category Economic growth rate (%)

Rate of increase in electricityconsumption (%)

GDP elasticity of electricityconsumption

Total electricity For industrial use Total electricity For industrial use

2000 8.8 11.8 9.4 1.34 1.07

2001 4.0 7.6 2.7 1.91 0.67

2002 7.2 8.0 6.4 1.12 0.89

2003 2.8 5.4 4.1 1.94 1.47

2004 4.6 6.3 5.3 1.36 1.14

2005 4.0 6.5 5.4 1.65 1.36

2006 5.2 4.9 4.7 0.94 0.90

2007 5.1 5.7 6.6 1.12 1.30

2008 2.3 4.5 4.5 1.94 1.96

2009 0.3 2.4 1.6 8.14 5.33

2010p 6.2 10.1 12.9 1.62 2.07

2011e 4.2 6.5 8.7 1.54 2.07

<TableⅢ-17> Trends in GDP elasticity of electricity demand


Electricity demand by sector

Electricity demand for industrial use is forecast to record a year-on-year rise of 8.7%

in 2011.

- The fabricated metal and basic metal industries including machinery, equipment,

and automobiles, are expected to lead growth in demand.



[DiagramⅢ-9] Outlook on economic growth rate and electricity demand increase rate

[DiagramⅢ-10] Outlook on electricity demand by sector


In 2011, the rate of increase in electricity demand for commercial use is forecast to

slow down to 4.5% in 2011 as it is expected that the economic growth rate will be

lower (4.2%) than the previous year.

Electricity demand for residential use went up 6.2% in 2010 due to influence from the

climate and a rise in income levels. The rate of increase is expected to go down to

around 3% in 2011 owing to base effects based on the assumption that average

year temperatures will be recovered as well as a slowdown in the level of increase in

income levels.

Electricity demand structure by sector

The share of electricity demand for industrial use is expected to substantially rise from

51.4% in 2010 to 52.5% in 2011 as it is forecast that there will be a rise in industrial

activities as a result of an upswing in the economy.

The share of electricity demand for residential use is forecast to drop from 14.1% in

2010 to 13.7% in 2011.

The share of demand for commercial use continually increased owing to growth of

the service industry from 2000 to 2009. However, the share decreased to 34.5% as

a result of strong demand for industrial use in 2010. The share is expected to

continue to go down to 33.9% in 2011.



[DiagramⅢ-11] Trends in electricity consumption share of each sector and forecasts


Outlook on electricity supply/demand in the summer of 2011

The government forecasts that peak demand this summer (June-August 2011) will

reach 74,770MW, a year-on-year rise of 7.0%18).

- An assumption was made that the economic growth rate for 2011 would be 4.2%,

and maximum temperature would be 33.3℃ and the average temperature would

be 28.8℃ .

- The power supply capacity is forecast to be 78,970MW, a year-on-year rise of

6.2%(4,630MW). A supplied reserve level of 4,200MW (supplied reserve margin of

5.6%) is estimated.

- In particular, demand for cooling in the summer is expected to reach 17,290MW, a

year-on-year rise of 12.3%, accounting for 23.1% of peak demand.

Government forecasts are similar to scenario No. 2 on summer peak demand that

was made by KEEI in March19).

- Scenario No. 2 are forecasts made based on the assumption that climate

conditions of this summer would be the same as those witnessed in the previous

year. It estimates peak demand at 74,846MW, a year-on-year rise of 7.1%.

- Considering the weather in June, there is a high possibility that the scenario No. 2,

which is similar to government forecasts, will become reality.




19) Refer to Volume 13, No. 1 of 「KEEI Korea Energy Demand Outlook」


A. Outlook on LNG demand

In 2011, LNG demand is expected to reach 35,252 thousand tons, a year-on-year rise

of 10.3%, gaining strength from a continuous increase in demand for power generation.

In 2011, LNG demand for town gas production is expected to post a year-on-year

increase of 5.6% to reach 18,595 thousand tons, continuing the sound level of

increase witnessed in the previous year.

In 2011, LNG demand for power generation is expected to reach 16,412 thousand

tons, a year-on-year rise of 16.0%, following record growth in 2010.

- LNG demand for power generation is forecast to continue high growth, considering

forecasts on electricity demand based on economic growth of 2011, despite base

effects from a considerable rise in consumption in the previous year.

Notes: 1) Values in parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts.The figures for power generation include the estimated directly-adopted volume of POSCO and K-POWER

2) LNG for power generation includes LNG input for district heating3) Total LNG refers to the total amount of primary energy that includes gas production loss and internal consumption



Outlook on LNG and town gas demand7

(Unit: 1,000 tons)

Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Town gas6,659 3,303 2,369 5,280 17,611 7,070 3,423 2,594 5,508 18,595(15.1) (22.7) (7.6) (6.6) (12.6) (6.2) (3.6) (9.5) (4.3) (5.6)

Power 3,918 3,123 3,071 4,038 14,150 4,874 3,647 3,395 4,496 16,412generation (45.3) (67.2) (32.9) (20.4) (38.3) (24.4) (16.8) (10.5) (11.4) (16.0)

Total LNG10,674 6,467 5,475 9,355 31,971 12,028 7,120 6,031 10,074 35,252(25.0) (39.8) (20.2) (11.8) (22.6) (12.7) (10.1) (10.2) (7.7) (10.3)

<TableⅢ-18> Outlook on LNG demand


B. Outlook on town gas demand

In 2011, town gas consumption is expected to record a year-on-year rise of 4.5% to

reach 21,712 million , gaining strength from a sound increase in demand for industrial

use.

The level of increase in town gas consumption for residential and commercial use

sharply slowed down as the number of customers reached a state of saturation.

Consumption for residential and commercial use is forecast to show little change.

- Assuming that average year temperatures will be maintained in 2011, consumption

for residential use is forecast to record a year-on-year decrease of 2.0%, and

consumption for commercial use is expected to slightly rise by 1.7% from the

previous year.

Consumption for industrial use is expected to mark a year-on-year rise of 8.1% to

reach 7,511 million as it is forecast that there will be economic growth.

- Consumption for industrial use, which accounted for 27.1% of total town gas

consumption in 2001, is continually taking up a higher share. In 2011, it is forecast

to account for approximately 34.6% of total town gas consumption.

Notes: 1) Values in parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to estimates2) Town gas total includes the amount used for transport and cogeneration



(Unit: Million m3)

Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Residential4,481 1,860 548 2,708 9,597 4,430 1,819 558 2,597 9,404(7.8) (18.6) (-6.3) (5.2) (8.1) (-1.1) (-2.2) (1.8) (-4.1) (-2.0)

Commercial1,323 686 674 905 3,588 1,310 699 680 959 3,648(7.8) (10.1) (5.3) (-1.0) (5.4) (-1.0) (1.9) (1.0) (6.0) (1.7)

Industrial1,962 1,629 1,437 1,920 6,947 2,138 1,750 1,560 2,063 7,511(35.5) (31.5) (13.0) (18.0) (24.4) (9.0) (7.4) (8.6) (7.5) (8.1)

Town gas 7,916 4,342 2,826 5,684 20,768 8,141 4,543 3,094 5,934 21,712total (14.5) (20.9) (6.1) (7.8) (12.6) (2.8) (4.6) (9.5) (4.4) (4.5)

<TableⅢ-19> Outlook on town gas demand


A. Outlook on coal demand

In 2011, coal demand is expected to stand at 120.9 million tons, a slight rise (1.1%)

from the previous year, owing to base effects from high growth witnessed in the

previous year.

Coal consumption in 2011 is forecast to maintain the consumption level witnessed in

2010 as it is expected that the level of increase in bituminous coal demand in the

steelmaking industry will rapidly slow down and the rate of increase in demand for

power generation will also become stagnant.



[DiagramⅢ-12] Town gas trends and outlook by use

Outlook on coal and other energy demand8


- Bituminous coal demand for steel making is expected to stand at 25.3 million tons,

a year-on-year drop of 0.3%, as it is forecast that demand in major steel industries

will slow down together with high base effects from the previous year, despite the

operation of a new facility (Hyundai Steel Blast Furnace #2).

Notes: Values in parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to forecastsSource: POSCO Research Institute, POSRI Steel Supply/Demand Outlook (April 2011)

- Bituminous coal demand in the cement industry turned around and went up in the

first quarter. It is forecast to slightly rise (0.4%) from the previous year as

international bituminous coal prices continue to increase and the construction

business remains stagnant.

- Since there are no new coal-based thermal power plants being built, bituminous

coal demand for power generation will likely maintain the level witnessed in the

previous year, when the maximum operation rate was recorded.

With regards to coal consumption trends per use since 2001, coal consumption for

power generation, which takes up the highest proportion, is steadily rising and

leading overall coal consumption.

- Coal consumption for industrial use has been repeatedly decreasing and increasing

according to economic trends. In contrast, coal consumption for power generation

has been steadily rising, attributable to a continuous rise in electricity demand.



(Unit: 1,000 tons, %)

Category2011e2010p

Annual 1/4p 2/4 3/4 4/4 Annual

Steel plate28,063 7,225 7,896 7,191 6,868 29,180(23.5) (6.5) (9.4) (4.3) (-4.2) (4.0)

Steel materials52,390 13,476 14,928 12,710 13,025 54,140(15.4) (2.9) (6.8) (4.1) (-0.6) (3.3)

<TableⅢ-20> Outlook on steel production


Notes: Values in parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts



(Unit: 1,000 tons)

Category2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Anthracite

Residential/commercial

Industrial

Power generation

Bituminouscoal total

Steel

Cement

Otherindustries

Powergeneration

Coal

2,540 (-1.3)

2,463 (31.7)

2,265(-12.6)

2,836(3.4)

10,105(3.4)

2,806(10.5)

2,462(-0.1)

2,332(3.0)

3,026(6.7)

10,626(5.2)

563 (-8.9)

236 (14.6)

219(-4.4)

842(-5.2)

1,860(-4.2)

550(-2.3)

220(-6.8)

215(-1.8)

871(3.4)

1,856(-0.2)

1,758 (8.5)

2,045 (51.7)

1,834(-8.7)

1,768(18.0)

7,406(14.4)

2,117(20.4)

2,056(0.5)

2,113(2.9)

2,792(7.0)

7,992(7.9)

219 (-34.4)

182 (-42.4)

212(-39.9)

226(-36.7)

839(-38.3)

139(-36.5)

186(2.2)

219(3.4)

234(3.5)

778(-7.2)

28,118 (25.6)

25,256 (8.8)

27,870(4.8)

28,159(6.6)

109,413(11.0)

27,615(-1.8)

25,686(1.7)

28,291(1.5)

28,673(1.8)

110,265(0.8)

7,354 (61.6)

6,176 (29.1)

5,180(4.4)

6,084(4.3)

25,424(22.6)

6,240(-15.1)

6,323(2.4)

6,217(7.0)

6,557(7.8)

25,336(-0.3)

928 (12.1)

1,148(-15.2)

932(-16.0)

1,051(-10.3)

4,059(-9.1)

1,052(13.4)

1,172(2.1)

903(-3.2)

947(-9.9)

4,074(0.4)

665(9.0)

592(12.4)

559(1.3)

661(5.8)

2,478(7.1)

689(3.6)

643(8.6)

603(7.9)

700(5.8)

2,653(6.3)

19,171 (17.0)

17,349 (4.9)

20,569(6.2)

20,363(8.4)

77,452(8.9)

19,634(2.4)

17,548(1.1)

20,569(0.0)

20,470(0.5)

78,221(1.0)

30,659 (22.9)

27,720 (10.6)

30,135(3.3)

30,996(6.3)

119,517(10.3)

30,402(-0.8)

28,148(1.5)

30,623(1.6)

31,699(2.3)

120,891(1.1)

<TableⅢ-21> Outlook on coal demand


B. Outlook on thermal energy, new & renewable energy, and other energy

In 2011, thermal energy demand is expected to record 1,796 thousand TOE, a year-

on-year increase of 4.5%, as it is forecast that a greater number of houses will be

supplied in the private sector and based on temperature assumptions.

A gradual increase in the supply of thermal energy is expected to continue as there is

a slight rise in the number of orders placed for the construction of houses in the

private sector, despite general sluggishness in the construction business.



[DiagramⅢ-13] Coal trends and forecasts per use


Notes: 1) Values in parentheses refer to the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts2) New & renewable energy/Other energy includes the amount consumed for transport

In 2011, new & renewable energy and other energy demand is expected to record a

year-on-year rise of 10.3% to reach 5,569 thousand TOE.

An increase in new & renewable energy demand is expected to be prominent mainly

in the public sector, gaining strength from the government’s propagation polices.



(Unit: 1,000 TOE)

Quarter2010p 2011e

1/4 2/4 3/4 4/4 Annual 1/4 2/4 3/4 4/4 Annual

Thermal 805 254 93 566 1,718 849 245 102 599 1,796energy (12.3) (25.2) (4.0) (4.4) (10.8) (5.5) (-3.5) (10.0) (5.8) (4.5)

1,197 1,232 1,176 1,143 5,047 1,324 1,364 1,288 1,593 5,569(3.7) (3.7) (3.7) (3.7) (3.7) (10.6) (10.7) (9.5) (10.4) (10.3)

<TableⅢ-22> Outlook on thermal energy, new & renewable energy, and other energy demand

New &renewable

energy/Otherenergy

[DiagramⅢ-14] Thermal energy trends and outlook


The industrial sector is forecast to actively move forward with increasing use of new &

renewable energy and other energy based on use of waste gas, in response to the

Renewable Portfolio Standard (RPS) planned for adoption in 2012.

A. Key characteristics

In the first quarter of 2011, primary energy consumption recorded a level of growth

that was lower than the economic growth rate due to influence from a soar in

international oil prices and the implementation of energy-saving policies.



Characteristics and implications9

[DiagramⅢ-15] Trends and outlook on new & renewable energy and other energy


From the second quarter of 2009 through the fourth quarter of 2010, quarterly

primary energy consumption continued a level of growth that was higher than the

economic growth rate. In the first quarter of 2011, however, it recorded a level of

increase that was lower than the economic growth rate (4.2%) at 3.7%.

Primary energy consumption indicated a relatively low increase rate in the first quarter

of 2011 despite continued favorable conditions in the economy as well as a cold

wave. The average temperature in January (-7.2℃) was as much as 5.4℃ lower than

average month temperatures.

* A 10.5% increase in industrial activity (mining/manufacturing industry production

index) in the first quarter: (Year 2010) 129.8 → (Year 2011) 143.3

* A 6.9% increase in HDD in the first quarter: (Year 2010) 1,588 → (Year 2011) 1,696

This seems to be partly attributable to a sudden rise in international oil prices and the

execution of energy-saving policies such as the ‘measure on placing restrictions on

heating temperatures in buildings’.

- The spot price of Dubai oil rose 22% in three months from $88.95/bbl in December

2010 to $108.53/bbl in March 2011.

- The ‘measure on placing restrictions on heating temperatures in buildings’was

carried out for four weeks (January 24-February 18, 2011), targeting 441 large

buildings, in response to high oil prices as well as record-breaking peak demand.

According to the Ministry of Knowledge Economy, all target buildings maintained

appropriate heating temperature levels.

* First inspection on all target buildings (January 24-27): Heating temperature

requirement observance rate of 95.5%

* Second inspection (February 10-15): All target buildings observed the indoor

heating temperature requirement of 20℃ or lower

- Results of an analysis on the level of contribution made by each factor towards a

rise in primary energy consumption in the first quarter of 2011 lead to the

assumption that the government’s implementation of energy-saving policies and a

rise in oil prices, excluding economic growth and temperature effects, resulted in

energy consumption-reducing effects of 2.1 million TOE.




Notes: The energy efficiency effect includes all factors that trigger a change in energy consumption excluding thetemperature effect and economic growth effect such as changes in the industrial structure and energy pricesas well as technical energy efficiency improvements.

Forecasts on energy intensity improvements in 2011

Energy intensity (TOE/million won) deteriorated in 2009 and 2010, but is expected to

improve to 0.248 in 2011.

- The worsened energy intensity of 2009 resulted from a 1.1% rise in primary energy

consumption, triggered by favorable conditions in production activities in industries

that consume great amounts of energy, against the backdrop of a substantial

slowdown in the economic growth rate (0.3%) due to the financial crisis.

- The worsened energy intensity of 2010 resulted from a soar in energy demand for

heating and cooling purposes, a result of abnormal climate conditions (abnormally

low temperatures in the winter and high temperature and humidity levels in the

summer), an increase in the number of steel facilities (Hyundai Steel and Dongkuk

Steel), and an increase in industrial activities owing to the economic recovery.

The worsened energy intensity in 2009 and 2010 seems to be temporary amid mid-

to long-term energy efficiency improvements.



[DiagramⅢ-16] Level of contribution of each factor towards a rise in primary energy consumption in the first quarter


Notes: p refers to tentative figures, e refers to forecasts

Continued rapid increase in electricity consumption

Electricity maintained a rapid increase in consumption due to several factors: low

charge; continued favorable conditions in industries that consume a great amount of

electricity; and diversification, increased size, and propagation of electric equipments.

- Electricity consumption indicated annual average growth of 9.8% in the 1990s, and

continued an annual average increase of 6.1% in the 2000s, the highest among key

final energy sources.

- Even in 2008 and 2009, when the final energy consumption increase rate stood at

a mere 0.6% and -0.3%, respectively, electricity consumption recorded relatively

high growth of 4.5% and 2.4%, respectively.

- Electricity consumption indicated two-digit growth (10.1%) in 2010, attributable to

the economic recovery and temperature effects. It is forecast to record high growth

of 6.5% in 2011 as well.

Consumption of electricity continues to mark high growth because of several factors.

- The fabricated metal industry (machinery and equipment, electricity and electronics,

semiconductor, automobile, etc.), an industry that consumes great amounts of

electricity, recorded the highest degree of growth among manufacturing industries.

* Average increase rate of value added from 2000 through 2010: (Manufacturing)

2.8%, (Fabricated metal) 5.6%

- From 2009 to 2010, operation of new facilities that consume great amounts of

electricity was launched in the steel making industry (Hyundai Steel, POSCO,

Dongkuk Steel, etc.).



Category 2005 2006 2007 2008 2009 2010p 2011e



<TableⅢ-23> Outlook on energy intensity


- Owing to the electricity change maintained at a relatively low, electricity is rapidly

replacing oil and town gas, energy sources for heating.

The rapid increase in consumption of electricity has expanded the level of

contribution made by electricity (triggering input of energy for power generation)

towards a rise in primary energy consumption.

- The level of contribution of electricity towards a rise in primary energy is forecast to

go up from 46.3% in 2010 to around 54.6% in 2011.

Electricity is expected to continue to perform leading roles in Korea’s energy demand

for the time being as a result of growth of core manufacturing industries, which

consume great amounts of electricity, and changes in lifestyles triggered by

technological development.

Energy demand increasingly sensitive to temperature changes

It has been assessed that temperature changes had a substantial influence on

primary energy consumption in the 2000s. In particular, the climate factor served to

substantially raise energy consumption in 2005 and 2010.

- This is because energy consumption now flexibly responds to temperature changes

in tandem with increased dissemination and use of cooling and heating equipment,

a result of economic growth and abnormal climate conditions that have frequently

occurred in the 2000s.



Category 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010p

198.4 208.6 215.1 220.2 228.6 233.4 236.5 240.8 243.3 260.8

2.2 -1.2 -2.2 -2.1 4.0 -2.3 -2.7 -0.3 -0.7 4.2

1.1 -0.6 -1.0 -1.0 1.7 -1.0 -1.2 -0.1 -0.3 1.6

Temperatureeffect

<TableⅢ-24> Assumed changes in energy consumption caused by the temperature effect

Primary energy(Million TOE)

Amount ofincrease/decrease

(Million TOE)

Increase/decrease rate (%)


Of peak demand in the summer and winter, demand for cooling and heating

purposes is taking up a higher percentage, according to analysis results of the Korea

Power Exchange. This supports the fact that energy demand sensitively responds to

temperature changes.

- The share of peak load taken up by electricity used for heating purposes at peak

demand last winter (December 2010-February 2011) is assumed at more than

25%. In particular, the recent rise in heating load is being led by heating for

commercial purposes.

Source: Press release by the Korea Power Exchange (Results of analysis of winter peak demand from 2010 to2011), March 7, 2011

It is forecast that peak demand this summer (June-August 2011) will record a year-

on-year rise of 7.0%20), of which demand for cooling will likely reach 17,290MW,

accounting for 23.1% of total electricity demand.



[DiagramⅢ-17] Changes in share of winter peak demand taken up by heating load



- Electricity demand for cooling is expected to indicate a year-on-year increase of

12.3% at peak load in the summer of 2011. It is thus forecast to increase much

rapidly than the average rate of increase in electricity demand.

As such, it is becoming increasingly important to come up with policies to stabilize

energy supply and demand, such as measures on electricity demand side

management in preparation for peak demand in the summer and winter.

It is forecast that oil dependence regarding primary energy consumption will decrease .

The share of oil reached its peak at 63% in 1994 and continued to decrease

afterwards. It stood at 40.0% in 2010 and is expected to further drop to 39.3% in

2011.

- The primary energy share taken up by naphtha, which is mainly used for industrial

raw materials, reached 16.3% in 2010, higher than LNG (15.9%) and nuclear

energy (12.9%). It is forecast to go up to 16.6% in 2011 as a result of an upswing in

the petrochemical industry.

- When excluding naphtha, the share of primary energy taken up by oil is expected to

decrease from 23.7% in 2010 to 22.7% in 2011. The share of primary energy

occupied by oil, excluding naphtha, is lower than that of coal (28.6%) and is almost

at the LNG (17.0%) level.

Considering Korea’s economic (industrial) structure, where the level of contribution of

the petrochemical industrial is high, the nation’s oil dependence target should be set

targeting petroleum products for fuel, excluding for industrial raw material use

(naphtha, asphalt, etc.).




B. Policy implications

In 2011, the value of energy imports is expected to reach a record-breaking 164.1

billion dollars, a year-on-year rise of 34.9%.

In 2010, the value of imported energy (oil, natural gas, coal, uranium) stood at 121.7

billion dollars, a year-on-year increase of 33.4%.

- The amount of energy imports (oil, natural gas, coal) indicated a year-on-year

increase of 8.8%, but the value of imports rose substantially owing to a surge in

energy prices such as international oil prices.

The value of energy imports in 2011 is estimated to reach a record-breaking 164.1

billion dollars.

- The level of increase in energy demand (imports) is expected to slow down this

year, but the value of energy imports is expected to indicate a year-on-year rise of

34.9%, owing to continued increase in international energy prices.

* Oil: (’09) $66.6 billion → (’10) $90.9 billion → (’11) $126.3 billion

* LNG: (’09) $13.9 billion → (’10) $17 billion → (’11)$22.8 billion

* Bituminous coal: (’09) $9 billion → (’10) $11.4 billion → (’11)$13.4 billion



[DiagramⅢ-18] Trends in oil dependence and forecasts


Notes: 1. Values in parentheses are the year-on-year growth rate (%); p refers to tentative figures; e refers to forecasts

There is a need to strengthen measures on stabilizing LNG supply and demand in

2011.

LNG consumption rose 22.6% in 2010 as a result of an increase in demand for

power generation. It is expected to mark high growth of 10.3% in 2011 as well.

* Rate of increase in consumption for power generation: (’09) -13.2% → (’10)

38.3% → (’11) 16.0%

* Rate of increase in consumption for town gas: (’09) 0.9% → (’10) 12.6% → (’11)

5.6%

- The increase in LNG demand for power generation, which is used to handle peak

load, is a result of a rise in electricity demand and not enough construction of base-

load power generation facilities (nuclear power, bituminous coal).

* Base-load power facility increase rate (as of the end of the year): (’09) 1.2% →

(’10) 2.5% → (’11) 2.4%

* Electricity demand increase rate: (’09) 2.4% → (’10) 10.1% → (’11) 6.5%



Category 2006 2007 2008 2009 2010p 2011e

Primary energy 233.4 236.5 240.8 243.3 260.8 269.9consumption

(Million TOE) (2.1) (1.3) (1.8) (1.1) (7.2) (3.5)

Amount of imports 238.7 246.8 255.5 257.1 279.6 285.2(Million TOE) (4.5) (3.4) (3.5) (0.6) (8.8) (2.0)

Unit cost (CIF)

- Oil ($/barrel) 62.8 69.3 98.3 60.8 78.7 103.4(24.4) (10.4) (41.7) (-38.2) (29.6) (31.3)

- LNG ($/ton) 472.2 494.9 726.6 537.3 521.6 640.0(21.9) (4.8) (46.8) (-26.1) (-2.9) (22.7)

- Bituminous 69.3 75.6 130.6 100.3 107.7 125.0coal ($/ton) (-4.2) (9.1) (72.8) (-23.2) (7.4) (16.1)

Value of imports 856 950 1,415 912 1,217 1,641(100 million dollars) (28.3) (11.0) (49.0) (-35.6) (33.4) (34.9)

<TableⅢ-25> Energy consumption and import and outlook


- In addition to LNG demand for power generation, LNG demand for town gas also

soars in case of a cold wave. As such, there is a need for thorough reviews and

measures to achieve stability in LNG supply and demand in the winter.

- There is also a possibility of a sharp rise in LNG demand to replace nuclear power

generation in Japan from the second half of the year, making it increasingly

important to draw up measures on stabilizing supply and demand in the winter.

There is a need to strengthen electricity demand management and boost efficiency in

use of electricity.

There are various restraints on the expansion of power generation facilities needed to

satisfy electricity demand. As such, there is a need to concentrate on electricity

demand management policies at the national level.

What is important is the smooth implementation of the load management system that

was adopted at the end of 2010.

- There is a need to take timely measures against mid-week changes in

supply/demand conditions that result from abnormal weather through flexible

operation22) of the ‘weekly forecast demand adjustment’system, which is a load

management charge system.

- To enhance effectiveness of load management, there is a need to expand the

target of load management from the previous industrial sector (steel making,

cement, etc.) to the service industry. There is also a need to extend the load

management period and expand targets, leading to the need for additional

budgetary support.

- There is also a need to encourage the maintenance of appropriate cooling and

heating levels in large buildings, where energy is excessively consumed, by

spreading information on how to use energy efficiently.



22) Previously, a notice on one-time execution was made on the Friday the week earlier. By makingimprovements to the system, the first notice is now made on the Friday the week before, followed by asecond notice during the week in consideration of changes in conditions.


There is a need to adjust the electricity charge to a realistic level so as to reduce

excessive consumption (especially for heating purposes) of electricity.

- Large shopping malls, financial institutes, and other organizations in the service

industry tend to provide excessive heating and cooling in Korea.

- To remove such practices that lead to the waste of resources, there is an urgent

need to strengthen the market functions of energy prices.

There is a need to make continuous improvements to energy efficiency systems to

enhance mid- to long-term energy efficiency at the national level.

- Expand the supply of highly efficient lighting fixtures and facilitate the adoption of

electricity-saving building management systems by promoting EERS (Energy

Efficiency Resource Standard) and ESCO (Energy Service Company) program.




KKEEEEII Korea Energy Demand Outlook(Volume 13 No. 2)

Printed on June 28, 2011

Issued on June 30, 2011

CEO of publisher: Kim Jin-woo

Registration: No. 7 on December 7, 1992

Printed by: Beomshinsa (02)503-8737

ⓒ Korea Energy Economic Institute 2011

132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do

Phone: (031)420-2114, Fax: (031)422-4958

Publisher: Korea Energy Economics Institute


KEEI

KEEI

KE

EI

Korea Energy Demand Outlook

ISSN 1599-9009

KoreaEnergy

Dem

andO

utlook June 2011

June2011

Volume 13, No. 2QUARTERLY ENERGY OUTLOOK

Korea Energy Economic Institute132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do

Phone: (031)420-2114

Fax: (031)422-4958

E-mail : [email protected]

Hompage : http://www.keei.re.kr

Korea

Energy

Econom

icInstitute

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