Natural Gas-Fired Plants on the Rise in South Korea

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Researched by Industrial Info Resources (Sugar Land, Texas)--Korea Southern Power Limited (KOSPO), a part of Korea Electric Power Corporation (NYSE:KEP) (Seoul, South Korea), and Doosan Heavy Industries and Construction Company Limited (SEO:034020) are in the midst of constructing a grassroot, liquefied natural gas (LNG)-fired, combined-cycle power station in Wonju. About 100 kilometers east of Seoul in the Gangwon province, Wonju is the home of a "low-carbon, green Earth" initiative, and is hoping to reduce regional greenhouse gas emissions 7% from 2005 to 2020. KOSPO anticipates the $1 billion power station will operate at a maximum capacity of 840 megawatts when completed during the fourth quarter of 2011.

South Korea heavily relies on imports to satisfy almost all of its natural gas requirements. It is slightly hindered by a lack of international pipeline connections, therefore requiring all natural gas to be delivered via tankers to import and regasification terminals in LNG form. LNG is regasified at Korea Gas Corporation (KRX:036460) (Seongnam, South Korea) terminals or by a joint-venture terminal operated by Pohang Iron and Steel Company (NYSE:PKX) (Pohang, South Korea) and Mitsubishi Corporation (TYO:8508) (Tokyo, Japan).

Natural gas demand has declined since its peak in 2007, driven by the recession and a decreased demand for electricity. Recovery has been slow, though consumer confidence is beginning to push sales back up. Power demand increased by almost 8% over the summer, and consumption by power generation companies jumped 52%. The majority is used by commercial, residential, and industrial consumers, while the remainder goes to power companies for the generation of electricity. This figure is expected to increase to 47% by 2030. Around 64% is produced via thermal means and 29% of that is taken up by natural gas.

In 2009, South Korea produced about 18 billion cubic feet of natural gas from its sole domestic gas field, Donghae-1, which is in the Ulleung Basin of the Sea of Japan. It is owned and operated by Korea National Oil Corporation (KNOC) (Anyang, South Korea), South Korea's national oil company, though KNOC plans to convert the project to an offshore storage facility in 2018.

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