LNG

Woodside Energy, the leading supplier of Australian LNG cargoes to North Asia, has signed a sale and purchase agreement with the South Korean state-owned utility Korea Gas Corp. as more Asian nations seek to secure long-term supplies for energy security.

The SPA provides for the supply of around 500,000 tonnes per annum of LNG for a period of 10.5 years on a delivered basis whereby Woodside supplies the shipping.

The supply deals with the Koreans begin in 2026 and will come from Woodside’s portfolio.

“LNG delivered to Kogas under the SPA will be sourced from uncommitted volumes across Woodside’s global portfolio, including the Scarborough Energy Project which is targeting first LNG cargo in 2026,” explained Woodside.

Kogas already receives Australian LNG cargoes from other regional projects such as Gladstone LNG in Queensland.

Queensland LNG

The GLNG plant is operated by Adelaide-based Santos and Kogas is a shareholder along with French major TotalEnergies and Malaysia’s Petronas.

The state-owned Korean utility has been a long-term regional importer from nations like Indonesia and Malaysia as well as Qatar and Oman in the Middle East.

Woodside Chief Executive Meg O’Neill said that the SPA was significant as Woodside’s first long-term supply agreement into Korea, the world’s third-largest LNG market.

She said the agreement reinforced the ongoing contribution of Woodside’s LNG towards the energy security needs of major customers in the region.

“Woodside is pleased to be a long-term supplier of LNG to Kogas, a leading global energy company and one of the world’s largest LNG importers,” said O’Neill.

“This agreement is further demonstration of ongoing robust demand for Woodside’s products from major energy customers in our region,” O’Neill stated.

LNG for power

Kogas President and CEO Choi Yeon-Hye said she was pleased to conclude the SPA with Woodside.

“This SPA has enabled Kogas to enlarge the customer base in the domestic power market, reinforcing our role as a leading natural gas supplier in Korea,” she stated.

“By leveraging this SPA, we look forward to further expanding our business opportunities with Woodside in the LNG industry,” added Choi.

Kogas controls or jointly controls five out of South Korea’s seven import terminals at Incheon, Pyeongtaek, Samcheok, Tong-Yeong and Jeju.

The other two terminals are at Gwangyang and Boryeong and are used respectively by steelmaker POSCO and other utilities.

Korea Electric Power Corp., the state-run utility, said it planned to import more coal this winter because of the price differential between coal and liquefied national gas shipments in terms of generation compared with cost where there was a 40 percent saving.

Nov 7 (LNGJ) - South Korean conglomerate HDC Group is planning a joint venture with Hanwha Energy Corp. for a natural gas-fired power plant in the southeast coastal city of Tongyeong and using LNG imports. HDC plans to build and operate the 1,000-megawatt gas-fired plant and would also construct a 200,000 cubic metres capacity LNG storage tank.

  Under the deal, Hanwha will supply LNG for the plant and both parties would develop the project jointly with 1.4 trillion Korean won ($1.2 billion) of investment. HDC was awarded a government licence in 2013 to operate in the power sector. The group said the construction of the plant is expected to start in 2021 with commercial operations from 2024.

The 210,100 cubic metres capacity Qatari Q-Flex LNG carrier, the “Al Safliyah” will become the largest LNG vessel to transit the expanded Panama Canal next week.

South Korea is seeking to reduce the operation of coal power plants because of rising levels of pollution and convert them to gas-fired plants using imported LNG shipments, though is being cautious about the timetable because of the higher fuel costs.

The Korean Trade, Industry and Energy Ministry announced it would regulate the operation of coal-fired power plants to reduce emissions of fine dust from coal as the country has faced its worst levels of pollution since early March.

The Ministry explained that it would move to have 60 coal-fired power plants scale down their operations to 80 percent of their capacity, an increase in restrictions currently imposed at 40 plants.

“Due to the disaster-level density of fine dust over recent days, the inconvenience and damage suffered by the people are becoming unbearable,” said Vice Minister Cheong Seung-il during a visit to the Yeongheung coal-fired power station located west of the capital Seoul.

“Although state-run power firms have been making efforts to cut fine dust emissions by 25 percent over the past three years through investing in facilities, more must be done to meet the demands of the people,” stated Cheong.

Analysts point out that fine dust particles are more likely to penetrate deeper into the lungs, while ultra-fine particles can be absorbed directly into the blood stream, posing serious health risks.

One additional problem for Seoul and its residents is the heavy pollution also brought across the border by winds from North Korea, which is just 50 kilometres away.

South Korean LNG imports rose 17.3 percent in 2018 to a record 44 million tonnes as shipments increased from traditional Middle East supplier Qatar and from new projects in Australia and the US.

The country already has ample LNG import capacity to replace coal and access to global LNG volumes as the current biggest recipient of growing US exports.

Korea Gas Corp. is the dominant LNG importer, though other companies also receive shipments at two of the nation’s six import terminals.

South Korea’s previous annual record of LNG shipments was set in 2013 when it faced a series of nuclear reactor shutdowns due to a safety scandal over faulty parts, leading to an increase in gas-fired power generation.

Four of Korea’s import terminals at Incheon, Pyeong-Taek, Samcheok and Tong-Yeong are operated by state-controlled Kogas and have huge storage tank capacity.

The two other terminals are owned by a utility and an industrial company. The Boryyeong terminal is operated by GS Energy and the Kwangyang facility by the steelmaker POSCO, whose shipments are organized by trading unit POSCO Daewoo.

The Industry Ministry said it would also be examining a plan to persuade existing coal plants to be converted to gas-fired plants using regasified LNG as fuel.

The Ministry believes that while South Korea can maintain a stable supply of power through 2026, it will have no choice but to build more plants beyond that period.

In the coming months the Ministry added that it would also partially suspend the operation of 48 coal-fired power plants from at least a week to 45 days over the March-June period, and fully shut down six other plants over the period.

“The Ministry will moreover promote the use of low-sulfur coal at local stations in order to reduce the emission of sulfur oxide, which accounts for three quarters of fine dust created from coal plants,” said the statement.

Concerning six old coal plants in the country, the Ministry said it would review closing them down earlier than planned.

The government plans to permanently shut down the six plants at some point between December 2019 and May 2022.

Almost 77 percent of the nation’s electricity is generated by plants using coal, nuclear or regasified LNG.

According to the Ministry, coal-based power is anticipated to take up 28.6 percent, or 36,031 megawatts of the total power capacity of 126,096 MW, in 2019.

Nuclear power supplied 27.5 percent of the country’s power in 2018 followed by plants using regasified LNG at 20.8 percent. The balance was made up of oil and other sources.

Under the government's present policy and outlook, South Korea is expected to depend more on coal in the future, with the figure increasing to 42,041 MW in 2022.

South Korea, the world’s third-largest liquefied natural gas importer, has suspended plans to end nuclear power generation as a summer heatwave has exposed security of supply issues and five nuclear plants are being brought back on line to support LNG and coal-fired electricity generation during the peak demand period of August.

Nov 23 – The 155,000 cubic metres capacity vessel “British Ruby”, operated by BP Shipping, will deliver a cargo on November 27 to the Tong-Yeong import terminal in South Korea from the Bontang plant in Indonesia, according to shipping data. The 174,100 cubic metres capacity ship “Cesi Gladstone” will deliver a shipment on December 5 to the Qingdao import terminal in Shandong province of eastern China, operated by Sinopec, from the Australia Pacific LNG plant in Gladstone, Queensland. The 145,000 cubic metres capacity carrier “Methane Lydon Volney” is scheduled to deliver a Shell cargo on December 14 to the Huelva import terminal in southwest Spain from the Pampa Melchorita export plant in Peru.