Korea Gas to expand LNG storage facilities, counter potential energy crisis

Panoramic view of Korea Gas’s head office [Courtesy of KOGAS]

The South Korean government is aiming to expand storage facilities and related infrastructure by building a port facility for liquefied natural gas (LNG) ships at Korea Gas Corp. (KOGAS)’s LNG production base in Dangjin, South Chungcheong Province by 2027 to accommodate an additional month’s worth of domestic gas. The move is in response to the recent energy crisis, particularly the gas crisis which erupted after Russia’s invasion of Ukraine on February 24th, 2023.

According to the Ministry of Trade, Industry and Energy on Sunday, KOGAS began constructing the port facilities, including a pier for LNG ships and a navigation channel, on the shared waters in front of the Dangjin LNG factory from late November 2023, and is part of the action plans under the 15th long-term natural gas supply plan announced in April. The government plans to expand natural gas storage facilities by 1.08 million kiloliters, equivalent to about 31 days’ supply based on the forecasted city gas demand for households and general use in 2023, by December 2027 to strengthen natural gas supply infrastructure.

KOGAS plans to secure additional natural gas storage capacity of 810,000 kiloliters each in 2029 and 2031 to total 2.7 million kiloliters, an increase of 22 percent given that the storage capacity was 12.16 million kiloliters in 2022. The Trade Ministry plans to add 2.66 million kiloliters of private storage tanks in Boryeong, Ulsan, Gwangyang, and Tongyeong during the period to prepare for volatility, with the capacity of private sector storage facilities currently standing at a mere 1.93 million kiloliters.

The government will also establish a gas supply system to all local governments for balanced regional development. According to the long-term natural gas demand forecast, the demand for power generation is expected to decline by 31.1 percent to 16.67 million tons in 2036 from 24.19 million tons this year, while that for household and general use is slated to surge by 14.0 percent to 14.53 million tons from 12.75 million tons and that for industrial use by 50.8 percent to 14.6 million tons from 9.68 million tons over the same period. The Trade Ministry will expand the main natural gas pipeline by 735 kilometers by 2036, up from 5,105 kilometers as of last year. It also plans to build three new loading berths at Gwangyang, Ulsan, and Yeosu bases, operated by private companies in addition to the one in Dangjin, to manage 15 gas carriers.

The government’s plan also aims to diversify LNG importing countries, and to enhance the stability of natural gas supply in case of disruptions in certain regions including the Middle East, the government will expand access to natural gas through companies with diversified supply sources. It will also increase the use of mid-term contracts to mitigate the risk of long-term contracts that do not easily reflect price volatility amid changes in the LNG market.