Korean general trading firms reap big profit from LNG business

2023. 8. 1. 11:18
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A gas field in Oman invested by Hyundai Corporation. [Courtesy of Hyundai Corporation]
South Korean general trading companies are reaping substantial operating profits, accounting for up to 30 percent, from liquefied natural gas (LNG) ventures, which are gaining attention as environmentally friendly fuels contributing to carbon reduction.

According to sources on Monday, Hyundai Corporation and POSCO International Corp. see their LNG gas field development projects on track for becoming a stable cash cow.

Hyundai Corporation’s investment in gas fields in Oman and Qatar yields annual dividends of around 30 billion won ($23.5 million).

Hyundai Corporation’s operating profit from the Oman and Qatar gas fields totaled 11.5 billion won in the first quarter of this year, accounting for 45 percent of its overall operating profit in the period.

The company also holds an even larger stake in the Yemeni gas field, which has been halted due to civil war, with dividend payments suspended since the first quarter of 2015.

However, upon resumption of production, an estimated annual dividend of 30 to 60 billion won is expected.

On Tuesday, Hyundai Corporation announced its second-quarter operating profit of 27 billion won, up 30 percent from a year earlier. The second-quarter dividend income from the Oman and Qatar gas fields is yet to be disclosed.

Similarly, POSCO International achieved an operating profit of 110 billion won in the April-June period from its offshore gas project in Myanmar. This accounts for 31 percent of the company’s total operating profit.

The Myanmar offshore gas project has secured supply contracts with Chinese firms, with prices determined based on the average oil prices from the previous four quarters, said a company official.

LNG has gained significant importance as an eco-friendly shipping fuel and a source of hydrogen fuel cells for power generation, aligning with carbon neutrality goals.

In response to this trend, LX International Corp. and Samsung C&T Corp. are also involved in LNG terminal projects, either in preparation or operation. LX International officially joined the LNG terminal project in Dangjin, South Chungcheong Province, while Samsung C&T operates the Manzanillo LNG terminal in Mexico as part of a consortium.

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