The start-up of new long-planned nuclear and coal power plants is expected to squeeze South Korea’s imports of LNG for the next five years, after reaching record volumes last year. The country is likely to cut spot purchases of the fuel from its main suppliers, including Qatar, Australia, and the US.
South Korea is currently the third-largest LNG buyer in the world. The country began increasing its LNG imports in 2015 and reached a record 44 million tons in 2018. However, some nuclear power generation plants have come back online this year, with a new plant started operation in August and another one at the end of this year.
Data from Korea Power Exchange showed that the country expected to start the operation of three additional large nuclear reactors in 2024 and seven new coal-fired power plants 2022. As a result, South Korea’s LNG imports are set to decline 9% year-on-year in 2019, according to estimates from a private energy consultancy.
In the January-September period, South Korea’s LNG imports stood at 29 million tons, customs data showed, falling 8.3% from a year earlier. On the other hand, nuclear’s share of total power generation in the country expanded to 27.4% in the first eight months of 2019, compared to 22.3% in the same period a year ago. According to estimates from Korea Energy Economics Institute, South Korea’s overall natural gas consumption will fall 2.4% annually through 2023.
The South Korean government will update its 15-year energy plan at the end of the year, which is expected to reduce coal consumption and shift towards renewables and gas. This may cause a pickup in South Korea’s LNG consumption in the mid-2020s.
Last month, South Korea’s presidential committee suggested closing more coal power plants. If implemented, it could drive LNG imports starting from around 2025. However, it may be for the short term as additional nuclear power will likely replace the loss in coal capacity, according to Peter Lee, a senior oil & gas analyst at Fitch Solutions.
