Despite South Korea’s plan to boost the use of nuclear energy in the country’s power generation mix by 2030, LNG will continue to play an important role in the government’s new energy strategy. 

President Yoon Suk-yeol was elected in March and is a strong supporter of nuclear energy. He plans to reduce the country’s dependence on coal, natural gas and oil imports to 60% by 2030, compared with 81.8% in 2021. Nuclear energy in the country’s power mix would rise to 30% by 2030, up from 27.1% in 2021. 

“With the global push for carbon neutrality, the escalation of Russia-Ukraine conflict and global energy supply chain uncertainties, energy security and attaining carbon-neutral goals are more critical than ever,” Korea’s Ministry of Trade, Industry and Energy (MOTIE) said when launching its energy policy in July.

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Coal currently makes up 35% of the power mix and gas represents 29%. Plans to reduce coal-fired power plants would be conducted in a “rational manner,” the government said, and eventually replaced by gas-fired generation. 

More details on the role of liquefied natural gas, coal, and nuclear in the country’s future power mix are slated to be published in 4Q2022, according to MOTIE. South Korea is one of the world’s largest LNG importers. 

South Korea’s summer heat wave has depleted gas inventories and state-owned Korea Gas Corp. (Kogas) is looking to secure additional spot cargoes to fill inventories for the winter season. Along with increased buying activity in Japan, South Korea’s push to refill inventories has supported prices in the region.

Asian LNG prices also reflect the tightness in the market from the impact of Russia cutting European supplies, which has put pressure on global spot buyers. October spot prices are quoted at a substantial premium to long-term contract prices and have been hovering around $40/MMBtu. 

Korean LNG imports between January and August were marginally lower at 30.09 million tons (Mt), compared to 31.07 Mt for the same period in 2021, according to Kpler data.

Korea is talking to several LNG producers, including Oman, to ensure its diverse LNG portfolio can meet future gas demand. 

“Amid skyrocketing LNG prices from rising uncertainties in the international gas market, securing the Korea-Oman energy supply chain is critical, and close cooperation should be maintained,” a South Korean minister said when meeting with Oman’s Energy and Minerals Minister Salim bin Nasser Al Aufi this month.

Korea holds term LNG contracts with Qatar, its largest supplier, and Australia, Indonesia, Malaysia, Russia and the United States. Korea continues to import LNG from Russia’s Sakhalin-2 facility. Russian supplies account for about 6% of South Korea’s LNG imports.

Nuclear Plans

Following Japan’s Fukushima disaster in 2011, Korea’s previous administration aimed to reduce nuclear use to 10% by 2034. The government had renewables representing 30.2% of power generation capacity by 2030, which has now been revised down to 21.5%, since Korea has limited solar and offshore wind resources.

Suk-yeol’s strategy would revive the country’s reputation as a maker and exporter of nuclear reactors. 
Korea has 24 nuclear reactors in operation, with four more to be built by 2030, and plans to extend the life of 10 older units. Construction continues on two nuclear reactors that are slated to be completed by 2024.