Natural gas industry in Korea: current status and outlook

Abstract

Korea's natural gas industry has a relatively short history, but it has displayed a dynamic growth and this growth will continue in the foreseeable future. The use of natural gas has been promoted due to the government policy to diversify the energy source to lower dependency on oil and to regulate air pollution, combined with consumers' preference for high grade energy. The structural change in Korea's energy use and supply, brought about by the growth of natural gas market in Korea, is of main interest of this paper. Particular focus is given to the rapid increase in gas demand and Korea's nationwide gas supply plan according to which massive facility construction projects have been undertaken. The Korea Gas Corporation (Kogas) is currently conducting projects for expanding its existing facilities and for building new ones. These include: building more LNG storage tanks, constructing a new LNG receiving terminal, and extending pipelines to form a nationwide transmission network. Attention is paid also to the reform of gas pricing mechanism in Korea so that it would provide with appropriate means for achieving various policy oblectives of the government.