Supply and Demand Trends and Plans for Natural Gas in South Korea

Author: 
An Tae-Hoon
Description: 
Strategy and Industry Research Unit Paper
JEL codes: 
Abstract: 
South Korea, which imported around 26 million tons of LNG (Liquefied Natural Gas) in 2007, is the worlds second largest LNG importing country after Japan. It has recently experienced a tight supply and demand of natural gas due to both domestic and overseas issues, such as the domestic consumption pattern concentrated in winter, the delay of concluding long-term contracts caused by domestic gas industry restructuring, and rapidly increasing global LNG demand. Meanwhile, both Japan and South Korea, which are close in geographical and cultural terms, also share many similarities in natural gas industries. For example, both countries depend on imports for the majority of their natural gas supply, the total amount of natural gas is imported in the form of LNG, the import volume by spot contract is increasing in order to make up shortfall in winter, and so on. To cope with the LNG market circumstance positively, both countries have recently developed their bilateral business relationship more closely, with the introduction of cargo swapping between their gas and electric power companies. In this report, natural gas supply and demand trends as well as future plans concerning gas industry in South Korea are examined based on the background of South Koreas natural gas demand pattern.