Natural gas will play ‘bridging role’ under new energy policy: KOGAS chief
The state-run Korea Gas Corporation (KOGAS) will diversify imports of natural gas as the resource is expected to play a “bridging role” under the new energy road map, its chief said.
KOGAS CEO Cheong Seung-il expected a greater role by the state utility firm under the Moon Jae-in administration’s plan to push up the portion of renewable energy from the current 7 percent to 20 percent by 2030 and phase out aged nuclear reactors and coal-fueled thermal power plants.
“Demand for natural gas is expected to rise as it needs to play a bridging role in the mid-term under the new energy policy,” Cheong said in a meeting with reporters at the Pyeongtaek LNG terminal, located southwest of Seoul, on Wednesday. “We should fully prepare for the hike in demand and increased volatility in the market by diversifying import sources.”
Demand for natural gas, a relatively clean source of fuel, is projected to grow at an annual rate of 0.81 percent to 40.49 million metric tons in 2031 from this year’s estimated 36.46 million metric tons, according to the government’s long-term gas supply plan.
KOGAS, the world’s second-largest corporate buyer of LNG, has been seeking to diversify its gas import portfolio beyond its traditional sources in the Middle East and Southeast Asia, which account for about 70 percent of the nation’s total supply. South Korea imported about 30 percent of its total supply from Qatar last year, while buying natural gas from Australia, Oman and other countries.
As the long-term contracts with Qatar and Oman expire in 2024, the chief said KOGAS will also seek ways to secure “maximum flexibility” when signing new deals to better deal with market fluctuations.
“The bulk of gas comes from certain areas, so the goal is to diversify where we get the resource and change the way we sign contracts,” he said.
Cheong said the firm is also developing business strategies to deal with market fluctuations because sales of natural gas are highly affected by changes in oil prices and foreign exchange rates, as well as the climate conditions.
“We will prepare measures to secure stable supply as the volatility in LNG demand is also expected to increase due to changing climate conditions,” he said.
In the domestic market, KOGAS plans to join efforts by local automakers and other state utilities to expand the infrastructure for hydrogen-fuel vehicles to help tackle air pollution problems.
On Wednesday, KOGAS signed a memorandum of understanding with Hyundai Motor Co., the nation’s leading automaker, and 13 other companies and organizations to establish a special-purpose company tasked with establishing hydrogen fueling stations across the nation.
“Hydrogen-fuel cars need infrastructure for fuel distribution and storage,” Cheong said. “KOGAS has gas pipelines nationwide and operates about 400 distribution management centers. We are looking into ways to use them as the sites for hydrogen-fuel charging stations.”
At present, electric current is used to turn water into hydrogen and oxygen, but converting natural gas into hydrogen is considered a cheaper, more efficient method of producing the emission-free fuel.
The latest move comes after the government announced a plan to supply about 15,000 hydrogen vehicles and 310 charging stations nationwide by 2022 to tackle air pollution problems and promote next-generation vehicles.
Local carmakers have released a series of next-generation fuel cell lineups in recent years, but demand remains feeble in the domestic market due in large part to a lack of charging stations.