Abandoning Resource Diplomacy?
There has been no budget allocated for shale gas technology for two consecutive years, making it harder for shale gas businesses to go forward. A total of 1.1 billion won (US$1.0 million) was invested in shale gas development for three years, until 2012. However, no further investment is now expected, exposing all the invested money to the risk of being lost. The Korean government is now facing criticism for failing to allocate a budget for shale gas technology, when countries like China or Australia have set out to promote shale gas technologies, following the United States that is enjoying a shale gas boom. Many people criticize the Korean government by saying that it is failing to keep up with the trend.
The National Assembly, Ministry of Trade, Industry and Energy, and the Korea National Oil Corporation confirmed on Dec. 9 that a government budget of 58 billion won (US$52.9 million) for nurturing shale gas technology for 2015 was refused by the National Assembly, which decided to cut it to zero. The money had been initially assigned for developing shale gas technology. However, even the basic budget was cut because of the aftermath of the “resource diplomacy” of the former Lee administration.
The government allocated a total of 1.11 trillion won (US$1.01 billion) for the shale gas sector: 435.6 billion won (US$396.4 million) in 2011, 455.1 billion won (US$414.2 million) in 2012, and 219.3 billion won (US$199.6 million) in 2013. This indicates that the administration saw the importance of shale gas as an unconventional source of energy. The budget allocated for the three years was invested to develop relevant technologies or acquire a stake in local businesses that participated in the Eagleford oil field project in Texas. An industry expert said, “The development of shale gas requires a sophisticated level of technologies,” adding, “You cannot survive the shale gas development competition unless you have a knowledge of horizontal drilling or a crushing method that crushes shale layers by injecting high-pressure water.”
However, the budget for nurturing shale gas development has been cut for 2 years in a row, making it hard not only for existing projects to continue but also for new projects to start. A government official expressed his concerns on the subject by saying, “The new plan for holding stakes of 10 additional shale gas mines cannot be implemented because of the budget cuts.” He also added, “The money invested for the last 3 years may become worthless if no progression of new projects would lead to the stop of shale gas technology development.”