South Korea LNG imports are expected to fall in the second half of the year as a number of nuclear power stations are set to come back into service.
South Korea LNG imports up nearly 16 per cent over last year
South Korea LNG imports are expected to drop in the second half of this year as a number of nuclear power stations are brought back online after being shuttered for maintenance.
Year-on-year, South Korea liquified natural gas imports grew by nearly 16 per cent to a record-high 22.7 million tonnes in the first half of this year, according to customs data.
About half of the Asian country’s 24 nuclear power plants were closed for maintenance during that time. Now, with about only six of the reactors expected to be offline for the remainder of the year, analysts predict that LNG shipments to South Korea will decline.
“(LNG) demand in the second-half won’t be as strong as in the first-half because nuclear run rates will rise,” Yang Ji-hae, an analyst at Samsung Securities told Reuters.
From January to May of this year, gas power generation made up 29.1 per cent of the country’s overall electricity output. Last year, gas power generation accounted for 20.4 per cent, according to Reuters. Nuclear power usually runs at about 30 per cent of electricity output and fell to about 20.8 per cent in the first five months of the year.
South Korea is shifting away from coal- and nuclear-powered electricity and has been pushing to use more natural gas for power generation. Currently, most natural gas in South Korea is used for hearing and cooking.
But, Nicholas Browne, senior gas analyst at energy consultancy Wood Mackenzie, told Reuters that 2018 South Korea LNG imports are expected to be similar to 2017. He adds that buyers are already storing natural gas ahead of winter.
“They are … filling storage in the traditional shoulder months, even if current spot prices are relatively high at $10/mmBtu. It likely means that KOGAS anticipates prices will head higher in the winter,” Browne told Reuters.
While demand is expected to decline for the rest of 2017, Yang says natural gas would “benefit from the country’s energy policy in the mid-to-long term”.
South Korea, the world’s third largest importer of liquified natural gas, imported 37.6 million tonnes of LNG in 2017, according to customs data.
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