SEOUL, Aug 22 (Reuters) - Korea Gas Corp (KOGAS) , South Korea’s sole purchaser of liquefied natural gas (LNG), is looking to take the fuel from its own overseas output to ensure a stable supply, Yonhap News Agency reported on Monday, citing KOGAS’s chief executive.
KOGAS CEO Lee Seung-hoon said global LNG trade has become a buyer’s market amid falling demand, the South Korean news agency reported after an interview with the company’s head.
“As demand drops, major suppliers are seeking to provide us with investment opportunities. Through this, if we drill gas and bring it into (Korea) after liquefying it, we can bring down costs,” Lee said.
“Now is the right time to invest in resource development.”
KOGAS buys about 30 million tonnes of LNG a year, and has long been the world’s biggest single buyer of the fuel. However, it will be surpassed this year by Japan’s Jera Co, a joint venture set up by Tokyo Electric Power and Chubu Electric Power to buy fuel for power stations.
Jera will import about 40 million tonnes of LNG this year.
South Korea, Asia’s fourth-largest economy and the world’s second-largest LNG buyer after Japan, imports nearly all of its energy resources. It has been active in overseas exploration and production projects since 2008 to secure its fuel needs.
The country’s state-run energy firms have been under pressure in recent years over loss-making overseas assets, prompting them to sell some of the projects as part of a broad debt-cutting and restructuring plan.
Lee, who took his post a year ago, said KOGAS plans to source LNG at cheaper prices through its own production during his remaining two years of tenure.
“We need to shift away from a conventional supply method of bringing LNG under high-priced long-term contracts from overseas,” he said.
A KOGAS spokesman said the CEO’s comments were in agreement with the state-run company’s long-term efforts to ensure a stable supply of LNG for South Korea.
KOGAS has been pursuing several overseas projects including a pipeline from Iran to LNG plants to be built in Oman, and the liquefaction of U.S. shale gas, its CEO said.
Earlier this month, KOGAS also signed a memorandum of understanding (MOU) with the Mexican state government of Yucatan to build an LNG import terminal and gas pipelines, which could cost between $1 billion and $1.5 billion. (Reporting By Jane Chung; Editing by Tom Hogue)