London, 17 June (Argus) — South Korea LNG imports rose by 32.1pc on the year to 2.92mn t in May, boosted by higher natural gas demand following a string of nuclear power plant closures.
The country's LNG demand does not typically spike significantly in the summer, unlike in the peak winter demand season, but the reduction in nuclear generation capacity since November has pushed imports up.
LNG imports reached 18.73mn t in January-May, up by 17.3pc on the same period in 2012. Despite rising demand, the average import price has not increased significantly, with South Korea paying an average of $14.55/mn Btu on a delivered basis in May, up by just 1.9pc on the month and down by 8.4pc on the year. The most expensive imports came from Oman and Qatar, at $18.40/mn Btu des and $18.25/mn Btu des, respectively.
South Korea's key importer, state-owned Kogas, has likely been able to keep costs down by securing additional cargoes from regular term suppliers such as Brunei, Indonesia, Oman, Qatar and Yemen. Qatar was the biggest exporter to South Korea imports in May, with 897,770t, followed by Indonesia with just over 582,800t. Imports from term suppliers Malaysia, Nigeria and Russia did not rise significantly in May.
Generator Korea Hydro and Nuclear Power shut down five reactors at the Yonggwang and Ulchin nuclear complexes late last year, after discovering tiny cracks in the control rod tunnel of one reactor, as well as the use of unapproved parts. This was followed by another two nuclear shutdowns — Shin Kori 2 and Shin Wolsong 1 — at the end of May because of safety concerns. The latest closures cut available nuclear capacity by 2GW, or 10pc, and are likely to keep LNG demand strong in the coming months.
A further seven reactors remain off line — the Kori 1 and 2, Wolsong 1 and 2, and Hanbit 3, 4 and 5 units. The Yonggwang plant was recently renamed Hanbit, while the Ulchin plant is now called Hanul. The shutdowns leave South Korea with just 12.1GW of available nuclear capacity, from a total installed capacity of 20.7GW.
The country's meteorological agency forecasts higher-than-average temperatures this summer, which could raise power demand above average, pressuring the country's reduced generating capacity. The ministry of trade, industry and energy has ordered government agencies and public organisations to reduce electricity use by 15pc on the year in July-August, and by more than 20pc during peak demand periods.
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