South Korea has several high energy-intensive industries. However, the country lacks ample natural resources and is majorly dependent on imported energy sources. Also, it is the third-largest LNG (Liquefied Natural Gas) importer globally.
The top LNG suppliers to Korea include Malaysia, the United States, Australia, and Qatar. Additionally, KOGAS (Korean Gas Corporation), the largest single LNG importer worldwide, dominates the wholesale natural gas sector. It maintains a monopoly over the wholesale distribution, import, and purchase of natural gas.
As per South Korea’s energy ministry, the LNG demand in the country is projected to record a 15.1% rise through 2034. This is attributed to the high LNG demand for hydrogen fuel cell cars and bunkering and the government initiatives to minimize power generation by nuclear and coal.
Moreover, South Korea is set to cooperate with other LNG importers on facility sharing, volume swapping, and flexible contracts. Accordingly, the state-run Korea Gas Corporation is looking to reduce contracts with regard to oil prices on a gas-on-gas basis to avoid oil price fluctuations. Also, the country plans to expand its storage capacity to secure a stable supply.
Further, many South Korean firms own shares in liquefaction projects in the countries like Canada, Indonesia, Australia, and the Middle East. In addition, they have signed long-term purchase agreements for the new liquefaction projects.