LNG

South Korea, the third-largest Asian liquefied natural gas importer, may be seeking more short-term cargoes after temporarily suspending one of its nuclear reactors on April 9 for safety reasons.

A statement from Korea Hydro & Nuclear Power Co. (KHNP) said that the No. 2 reactor at the Kori Nuclear Power Plant, located at the port of Busan, about 325 kilometres (202 miles) southeast of the capital Seoul, was halted on April 8 upon the expiry of its 40-year permission to operate.

The Kori-2 unit began commercial operations in April 1983 as the country's third nuclear reactor.

Currently, South Korea operates 18 out of its 25 nuclear reactors and this closure takes it down to 17.

The shutdown comes at a time when the Korean Ministry of Trade, Industry and Energy has plans to also cut coal-fired power generation by around half (from 42 percent to 22 percent) through 2030.

Phase-out policy

The new Government of Yoon Suk Yeol had reversed the previous government’s nuclear phase-out policy and has been working to expand nuclear power generation to 30 percent of the country's total by 2030, with the figure for 2021 coming to 27.4 percent.

South Korea’s LNG imports had risen to an annual 47 million tonnes and plans to have more nuclear power to replace higher-priced LNG have now been affected by the Kori-2 plant closure.

The largest LNG suppliers to South Korea are Qatar and Australia with around 11 MTPA of cargoes each followed by the US and Oman.

South Korea sources all of its gas from LNG imports more about 55 percent is used to generate electricity with 16 percent used as chemical feedstock or a source of heat and 26 percent allocated to the commercial and residential gas sectors.

The company responsible for the Kori-2 nuclear reactor is Korea Hydro & Nuclear Power Co. (KHNP).

Huge losses

KHNP is itself a unit of Korea Electric Power Co. (KEPCO), a company 51 percent owned by the government and which is in the middle of a financial crisis after reporting huge losses in 2022.

The utility’s losses reach 30 trillion Korean won ($23 billion) in 2022, though has been kept viable by the Government allowing an increase in its debt ceiling and for giving permission to raise power prices.

As regards the Kori-2 nuclear reactor, the Government explained that the suspension was “inevitable” as the process to extend its lifespan has been delayed due to the previous government's policy to phase out nuclear power.

The new plans involves keeping the Kori-2 plant open until June 2025.

However, even if the government’ re-opening procedures are speeded up the closure is expected to last for two years.