South Korea plans to shake up the country’s energy mix, increasing its imports of LNG while cutting coal and nuclear power. The country is already the world’s second-largest importer of LNG.
Newly-elected South Korean President Moon Jae-in is planning a more environmentally friendly energy policy that will halt the construction of new coal and nuclear plants, the Financial Times reported last week. South Korea is the fifth-largest importer of thermal coal and ranks sixth among nuclear power generators. Coal and nuclear produce two-thirds of the country’s electricity, but concern is growing over the levels of air pollution and the safety of nuclear power plants (NPPs).
South Korea’s turn to LNG should help absorb the expanded volume of LNG that will be placed on the market between now and 2020. South Korean demand for LNG is expected to reach 37 million tpy by 2022, according to the business daily, which reported that LNG demand will grow by 2.2% per year to 2040.
Qatar is a key supplier of LNG to South Korea and will likely supply more in the years to come as the Gulf state takes steps to expand its 77 million tpy capacity by 30% -- provided Doha’s current diplomatic row with other Gulf states does not impede those plans. Qatar announced plans in early July to increase capacity to 100 million tpy, by 2022-24.
South Korean importers, KOGAS and SK Group, recently displayed an interest in establishing closer ties with US gas producers during a recent visit to Washington by Jae-in. Both companies signed several memorandums of understanding (MoUs) with US producers, which could drive exports.
KOGAS signed an MoU with Energy Transfer of Dallas and with Royal Dutch Shell, which are developing the Lake Charles LNG project in Louisiana. The deal will examine the feasibility of the Korean company joining the project. It also signed an MoU with Sempra Energy and Australia’s Woodside Petroleum, which could lead to KOGAS’ involvement in the Port Arthur LNG project, in Texas.
It also signed an agreement with the Alaska Gasline Development Corp. covering possible investment, development and operations with the Alaska LNG project.
SK Group signed MoUs with Continental Resources and GE Energy regarding the joint development of shale gas reserves in the US.