Korea Gas Corporation (KOGAS), South Korea’s main liquefied natural gas (LNG) procurement company, said that it will invest nearly USD9 billion by 2025 to expand its natural gas capacity and related infrastructure as the country moves towards clean energy. Another USD1 billion will go towards developing LNG bunkering and hydrogen-fueled cars.
These plans were detailed by KOGAS on 17 August to mark the 35th anniversary of its foundation.
KOGAS said that of the USD9 billion, USD5.3 billion will go towards expanding LNG capacity and improving energy management, while the remaining budget will be invested in overseas LNG liquefaction projects to diversify South Korea’s LNG supply sources from the Middle East and Southeast Asia. KOGAS has been buying LNG from Australia, Qatar, Oman, and the United States. There are also plans to work with other Asian LNG importers to secure LNG at lower prices.
By 2025, South Korea hopes to save over USD5 billion through this strategy.
Coal is still the largest component of South Korea’s energy mix but President Moon Jae-in has pledged to increase consumption of clean and renewable energy by 2030.
South Korea’s demand for natural gas is estimated to grow at 0.81% per year to 40.49 million tonnes in 2031, from 36.46 million tonnes in 2018, according to the government’s long-term gas supply plan.
KOGAS’ plans mirror those of its Japanese counterpart JERA, which has also been expanding its portfolio to cover international LNG trading. JERA has arrangements with EDF Trading and Centrica to sell LNG in Europe.
Many Asian countries are looking to launch LNG bunkering to comply with the International Maritime Organization’s implementation of a global sulphur cap of 0.5% in marine fuels from 2020.
However, the main challenges are the higher prices of LNG-fuelled ships and the lack of critical infrastructure, which has necessitated government intervention in the form of subsidies.
On 17 May, South Korea’s Ministry of Oceans and Fisheries announced that financial assistance would be given to help shipowners and ship builders to construct LNG-fueled vessels. This is part of South Korea’s Five Year Plan to revive the struggling maritime industry there.
Singapore, the world’s largest bunkering port, and a major shipping hub, has also granted subsidies to its two licensed LNG bunker suppliers, FueLNG and Pavilion Gas, to build LNG bunkering vessels.