Korea Energy Market LNG
Korea’s energy policy supports a move away from coal and civil nuclear in favor of LNG and renewable. This has implications as the U.S. liquefaction capacity continues to grow.
Korea is one of the top destinations for U.S. liquefied natural gas (LNG). U.S. LNG contracts offer competitive advantages in flexibility of destinations, prices, and so forth. As such, U.S. LNG export project developers are strategically positioned as preferred suppliers of LNG to meet Korea’s energy fuel needs for city gas and power generation.
Korea’s energy intensity is considered relatively high due to the country’s large proportion of highly energy intensive industries. Because Korea lacks sufficient energy in natural resources, the country relies on imported energy commodity sources to meet approximately 95% of its fossil fuel energy requirements, thereby sustaining its status as one of the world’s largest importers of energy, such as LNG. Korea’s LNG consumption and LNG imports are expected to remain robust, due to the Korean government’s ongoing efforts to move away from coal and nuclear power as sources of energy.
This energy-transition sentiment was further reinforced and outlined in one of Korea’s national energy plans, the ‘8th Basic Plan for Long-term Electricity Supply and Demand (2017-2031).’ This 8th Plan articulated Korea’s endeavors to gradually move away from nuclear and coal as sources of power and rely more on cleaner and safer sources of energy, such as LNG. With LNG, power generation capacity is expected to increase to 47.5GW by year 2030, from 37.4GW in 2017. Moreover, a separate but relevant energy plan referred to as the ‘13th Long-term Natural Gas Supply and Demand Plan (2018-2031),’ stated that natural gas demand will increase to approximately 40.4 million tons by year 2031.
As one of the world’s largest buyers of LNG, the Korea Gas Corporation (KOGAS) imports about 90 percent of Korea’s LNG and retains a monopoly in the domestic wholesale market, with customers that include both the power generation and city gas companies. In addition, there are power generation companies, such as SK E&S and Korea Midland Power (KOMIPO), which directly import and purchase LNG, but only for their own respective uses. Overall, it is extremely important to establish rapport and dialogue with these Korean LNG stakeholders throughout the project life cycle.
Taking into consideration these market dynamics and sentiment factors, and the importance of engagement with Korean LNG stakeholders, Korea represents an excellent opportunity for qualified American LNG export project developers.
For questions, contact the U.S. Commercial Service Korea at the U.S. Embassy in Seoul: Daniel Lew, Commercial Officer Daniel.Lew@trade.gov and SB Shin, Commercial Specialist email@example.com.