Domestic User Consumption to Support New South Korean LNG Terminal

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--After winning the contract to build South Korea's $681 million Boryeong LNG terminal in South Chugcheong province, GS Engineering & Construct (GSEC) (KSX:006360) (Seoul) said that it will seek to expand its market for liquefied natural gas (LNG) terminals by pursuing opportunities overseas.

The total project contract is split into 54% for GSEC and 46% for SK Engineering & Construction (SKE&S) (Seoul), South Korea's leading city gas provider. Boryeong LNG Terminal Corporation is a private company established jointly by GSEC and SKE&S.

The terminal will be located at a 1.08-square-kilometer site in the Yeongbo industrial zone in Boryeong. Facilities will include three 200,000-kiloliter (52.8 million-gallon) LNG storage tanks; a 45,000-ton liquid petroleum gas (LPG) storage tank; and a regasification plant. Construction will take place over four months, with completion scheduled for September 2016.

At the end of April, South Korea's Ministry of Trade, Industry and Energy said that the country's LNG demand is expected to fall 0.1 % annually to 37.7 million tons by 2027. The long-term plan sees nuclear power and coal replacing LNG in electrical power generation, and LNG demand for power generation will slump 5.5% annually to 7.76 million tons in 2027, from 18.18 million tons in 2012.

But LNG demand for households and industry will grow at an annual rate of 2.7%, from 20.11 million tons in 2012 to 29.94 million tons in 2027, according to Platts.

Total LNG demand is forecast at 39.76 million tons in 2015, then 33.97 million in 2020, and back to 37.7 million tons in 2027, paralleling economic growth.

State-owned Korea Gas Corporation (Kogas), which has a monopoly on domestic natural gas sales, sold a total of 36.55 million tons in 2012, up 8.9% from 33.75 million tons in 2011. Kogas forecast sales of 37.86 million in 2013, a year-over-year increase of 3.6%.

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