Journal of the Korean Society of Mineral and Energy Resources Engineers ISSN:2288-0291(Print) 2288-2790(Online) 한국자원공학회지

Utilizing the externality model and strategy decision model, this paper analysed the necessity and the effectiveness of overseas resource exploration and production (E&P) promotion policy. It might have positive externality to the entire society more than procuring overseas resource itself to secure additional overseas resource. Therefore, the government should promote private companies\' overseas resource E&P business. Moreover, if an E&P company receive more government subsidy than its loss from overseas resource E&P business, the company always make a choice to pursue overseas resource E&P business as dominant strategy whatever other competitors\' choices are. However, if the government promotion policy was shrunk or was abolished even when foreign countries maintain their own promotion policies, then domestic company has to abandon its overseas resource E&P business. In result, energy security may be weaken. From the above results, we can assert that overseas resource E&P promotion policy is effective. This policy could also promote our companies to participate in overseas resource E&P business, and it eventually leads to strengthen energy security. The government promotion policy might be implemented by various forms of subsidy, tax reduction, prime rate. Using public funds, providing risk money, government guarantee and trade insurance, and maintaining favorable political relationship with countries with natural resources could be other types of promotion policies, too.