South Korea Nuclear Plan Could Pose Risks to LNG Demand
South Korea’s plans to expand the share of nuclear in its long-term power generation could pose downside risks to long term LNG demand.
That’s what analysts at BMI, a unit of Fitch Solutions, said in a new report sent to Rigzone recently, highlighting that the country’s 10th Basic Plan for Long-term Electricity Supply and Demand envisages boosting the share of nuclear power generation from 27.4 percent in 2021 to 32.4 percent by 2030 and up to 34.6 percent by 2036.
“In contrast, the plan cuts the share of LNG from 29.2 percent in 2021 to 22.9 percent in 2030 and to 9.3 percent in 2036,” the BMI analysts stated in the report.
“This is a complete reversal of former President Moon Jae-in’s policy to shut all reactors when they reach retirement age of 40 years and expand the role of LNG in power sector. The decision to favor nuclear appears to be driven by the desire to lower LNG import bill and meet its target of reducing emissions by 40 percent by 2030 as part of long-term decarbonization strategy,” the analysts added.
“We expect the new policy to generate significant implications on demand for LNG in [the] power sector in the longer term, but we do not expect immediate impact on LNG consumption in the near term due to strong market fundamentals supported by rising LNG imports and sharply declining spot LNG prices,” the analysts continued.
In the near and medium terms, the power sector is expected to offer significant potential upside risks to LNG consumption, according to the BMI analysts, who highlighted in the report that “demand growth [is] largely expected to come from the policy-driven conversion from coal to LNG at power plants”.
The BMI representatives pointed out in the report that the former President Moon Jae-in’s government had already shut 10 ageing coal-fired power plants.
“In early 2022, the government has permanently shut its two oldest coal-fired Honam No. 1 and No. 2 power plants, which will be replaced by new LNG-based ones in line with previous government’s push to reduce the country's reliance on coal in electricity generation,” the analysts said.
“Therefore, we expect LNG to find support from opportunities to replace coal in power sector since the government aims to reduce the role of coal from 34.3 percent in 2021 to 19.7 percent in 2030 and 14.4 percent by 2036,” the analysts added.
“Gas will remain the fuel of choice to replace more pollutive coal-fired power generation,” the analysts went on to state.
Despite elevated spot LNG prices, South Korea’s LNG imports continued to increase in 2022, the BMI analysts noted in the report.
“LNG consumption from [the] power sector remained high at around 11 million tons per annum in 2022,” the analysts said.
In the report, the BMI analysts predicted that South Korea’s LNG imports could surprise to the upside if the nuclear targets fail to materialize.
“The government’s frequent policy changes signaled the uncertain path to the role of gas in energy mix and supply-demand trajectories,” the analysts stated.
“President Yoon may push forward his policies to be implemented throughout his term, but we do not rule out his current energy policies could be reversed when his time in office ends in early 2027. We expect South Korea’s LNG imports to rise marginally over the short-and-medium term rising to above 61 bcm in 2026 as it looks to replace coal with LNG and expand LNG regasification and storage capacity,” they added.
“However, LNG imports are expected to decline from 2027 onwards, with total imports falling to 54 bcm in 2032 in view of potential loss of demand stemming from expansion of nuclear power generation,” the analysts went on to state.
LNG Import Table
According to BP’s latest statistical review of world energy, which was released in June 2022, South Korea was the third biggest LNG importer in 2021 with a figure of 64.1 billion cubic meters. China was the top importer, with 109.5 billion cubic meters, and Japan was the second biggest importer, with 101.3 billion cubic meters, the report showed. Total LNG imports in 2021 came in at 516.2 billion cubic meters, the report revealed.
BP’s latest statistical review, which shows LNG import data from 2011 to 2021, lists South Korea as the second biggest importer of LNG in 2011, 2012, 2013, 2014, 2015, and 2016. The review lists South Korea as the third biggest LNG importer in 2017, 2018, 2019, and 2020. Japan was the top LNG importer from 2011 to 2020, according to the review.
Total LNG imports in 2020 were 490.1 billion cubic meters, the review revealed. This figure stood at 484.2 billion cubic meters in 2019, 430.4 billion cubic meters in 2018, 393.3 billion cubic meters in 2017, 358.3 billion cubic meters in 2016, 337.1 billion cubic meters in 2015, 333.6 billion cubic meters in 2014, 326.8 billion cubic meters in 2013, 324.9 billion cubic meters in 2012, and 328.3 billion cubic meters in 2011, according to the review.
President Yoon Suk Yeol was inaugurated on May 10, 2022, as the nation’s 20th head of state, an English language version of the office of the President of the Republic of Korea website shows.
“I stand before you today, humbled by the trust and responsibility that you have given me and mindful of my solemn duty to rebuild this great nation,” the new president said in his inauguration speech, which was posted on the site.
“It is our generation’s calling to build a nation that espouses liberal democracy and ensures a thriving market economy, a nation that fulfills its responsibility as a trusted member of the international community, and a nation that truly belongs to the people,” he added in the speech.
“It is critical that we achieve rapid growth and this will only be possible through science, technology and innovation,” he continued.
To contact the author, email firstname.lastname@example.org
What do you think? We’d love to hear from you, join the conversation on the
Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.
- Half of Oil and Gas Workers Find Their Work Exhausting
- Riled on Nord Stream Probe, Russia Summons European Envoys
- China Solar Exports Grow to $52B
- Aker BP Makes Significant Oil Find Offshore Norway
- UK Lowers Energy Ceiling Prices
- Colombia Rethinking Fossil Fuel Exploration Ban: Minister
- Household Energy Prices Stagnate in Urban South Africa
- Saudi Arabia Snaps Up Russian Diesel and Sends Its Own to Europe
- Top Headlines: What Will World Oil Demand Be in 2023?
- Oil Futures Settle on Second Weekly Gain
- Who Is the Most Prolific Private Oil and Gas Producer in the USA?
- What Will World Oil Demand Be in 2023?
- ExxonMobil Sells Williston Assets
- What New Oil and Gas Jobs Will Exist in the Future?
- Most of North America at Risk of Energy Shortfalls This Summer
- Where Will WTI Oil Price Land This Year?
- Nigeria Eyes Over $50B Oil Projects in Five Years
- Machine Learning Has Potential to Transform Oil and Gas
- Speculative Positioning in Crude Back to March Bearish Extreme
- USA Extends Wind-Down Window for Companies with Venezuela Assets
- Who Is the Most Prolific Private Oil and Gas Producer in the USA?
- USA EIA Slashes 2023 and 2024 Brent Oil Price Forecasts
- BMI Reveals Latest Brent Oil Price Forecasts
- OPEC+ Has Lots of Dry Powder for Further Cuts
- Are Oil and Gas Professionals Worried About AI?
- Could the Oil Price Crash in 2023?
- BMI Projects Gasoline Price Through to 2026
- Invictus Strikes Oil, Gas in Zimbabwe
- TechnipFMC Bags Exxon Deal Worth At Least $500MM
- Current Oil Price Pullback Wrapped Into Recession Fears