Korea to diversify LNG supply sources, seek joint purchasing with neighbors

LNG bunker ship [Photo provided by KOGAS]

The South Korean government is pushing to diversify its natural gas import sources that currently focuses on the Middle East to minimize potential supply instability rising from global volatility.

The Ministry of Trade, Industry and Energy on Thursday announced the 15th Long-term Natural Gas Supply plan that involves natural gas supply forecast and supply management measures through 2036.

The ministry projected that the overall natural gas demand in Korea will decline by an average of 1.38 percent annually to 37.66 million tons in 2036 from 45.09 million tons in 2023.

Based on this forecast, the government will pursue import diversification to address concerns over potential supply disruptions caused by local conflicts or equipment failures.

Korea’s reliance on natural gas from the Middle East has decreased from 53.2 percent in 2014 to 37.4 percent last year.

The government will also strengthen cooperation with China and Japan, given their similar liquefied natural gas (LNG) consumption patterns and geographical proximity.

The state-owned Korea Gas Corporation (KOGAS) signed a memorandum of understanding (MOU) with JERA Co., a Japanese energy company with the world’s largest LNG purchasing power, on April 7, to enhance cooperation in joint response to market dynamics and information sharing.

The government also plans to minimize fluctuations in LNG supply prices by constructing diverse contract portfolios, including mid- and short-term contracts, to mitigate long-term contract risks that may be difficult to reflect in LNG prices in a timely manner.

The government also stated that KOGAS will strengthen cooperation with domestic private importers to activate market competition, as the proportion of direct LNG imports is on the rise.