Overview

Despite being attached to the East Asian mainland, South Korea has no pipeline access to Russian or Chinese gas networks, meaning the country is heavily reliant on waterborne LNG supplies.

South Korea remained the world’s second-largest importer of LNG in 2013, despite China increasing the amount it imports. All of South Korea’s gas arrives as LNG at four terminals around the country, before being moved to power stations, industry and residential users.

The country is planning on adding another three regasification terminals in Samcheok, Boryeong, and on Jeju Island. Together these would add close to 10 mtpa of regasification capacity.

Imports are managed by state-owned Kogas, which is the largest corporate importer of LNG in the world, and distributed primarily to state-owned power generation companies.

Like Japan, South Korea has experienced its own nuclear scandal in recent years. Several of the country’s plants were found to be using parts with forged safety certificates. As a result, the plants have been undergoing staggered safety checks, which led to LNG consumption increasing by nearly 10% year on year in 2013. LNG imports are scheduled to fall to pre-crisis levels of approximately 36 mt this year as plants return to normal operations.

South Korea has a burgeoning economy that is recovering quickly from the financial crisis, having achieved growth of 6.3% in 2010, according to the CIA World Factbook. Growth slowed to 2% in 2012 as the export-led economy was hampered by reduced demand from depressed export markets.

Energy security is an important issue and the country is progressing with plans for nuclear power to provide 59% of electricity generation by 2030 – up from 30% in 2011. Coal and gas are the other major contributors to electricity generation and need to be imported in large quantities. The government has strict greenhouse gas emission reduction targets, with plans to introduce an emissions trading system in 2015. This is expected to damage the economics of coal-fired generation and provide an incentive for gas.

To improve security and reduce the cost of LNG imports, Korean gas companies are searching for new sources of supply – particularly from North America. Kogas signed an agreement with Cheniere Energy for LNG supplies from 2017. LNG imports are expected to increase over the decade, while another three new terminals are scheduled to become operational.

Page updated: 04/08/2014