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South Korea‘s imports of liquefied natural gas (LNG) are set to reach an all-time high over 42 million tonnes in 2018 thanks to robust power generation demand, but next year’s shipments are likely to ebb on increased coal and nuclear power.
South Korea, the world’s No.3 LNG importer after Japan and China, typically takes between 33 million and 37 million tonnes of LNG a year, mainly for heating, power generation and cooking.
This year, a volume of 42.8 million tonnes of LNG is the expected intake, up 13.8 per cent from 37.6 million tonnes last year, according to ship-tracking data from Refinitiv Eikon.
That would top 2013 LNG import levels of nearly 40 million tonnes, the country’s customs data showed. That was the year South Korea faced a series of nuclear reactor shutdowns due to a safety scandal over faulty parts, which led to an increase in gas power generation.
“Gas usage for power generation sharply rose this year because the country’s nuclear utilization rate was the lowest so other power sources like gas had to fill the void,” said Shin Ji-yoon, an analyst at KTB Investment & Securities in Seoul.
In the six months of the year, an average of almost half of the country’s 24 nuclear reactors were offline for planned maintenance, according to Reuters calculations based on data from state-run Korea Hydro & Nuclear Power Co. As of now, six reactors are shut down.
South Korea’s nuclear utilization rates dropped to just 63.6 per cent for the first three quarters of 2018, the lowest rate ever, according to the Korea Hydro & Nuclear Power data.
LNG VOLUMES EXPECTED TO BE LOWER IN 2019
Coal and nuclear together produce about 70 per cent of South Korea’s total electricity needs, although the country is trying to lower its dependence on those two fuels to shift its energy policy towards cleaner and safer energy in the long term.
This year, gas power’s share of the country’s power supply mix outstripped nuclear-produced electricity over January-October, according to calculations on data from Korea Electric Power Corp (KEPCO).
Gas-fired generation through October accounted for 26.7 per cent of electricity produced, up from 20.3 per cent last year, while nuclear made up 23.1 per cent, down from 27.6 per cent.
Looking ahead, South Korea’s LNG demand growth for power generation is expected to hover around 1 per cent in 2019, down from nearly 20 per cent this year, robbed of room to grow as more coal and nuclear power plants are still coming online despite the plans for a long-term shift in policy, according to a report by state-funded think-tank Korea Energy Economic Institute.
“We expect that (LNG) imports next year will be lower than this year but will still exceed 40 million tonnes,” said Nicholas Browne, director of Asia-Pacific gas and LNG at Wood Mackenzie.