An analysis has found that the volume of liquefied natural gas (LNG) imported directly by the private sector without going through the Korea Gas Corporation has saved more than 14 trillion won in national energy expenses over the past 10 years (based on an exchange rate of 1,380 won to the dollar). There are also assessments that this has strengthened energy security amid the LNG supply crisis caused by the Russia-Ukraine war and alleviated the government's financial burden.
In the past, LNG was exclusively imported by the Korea Gas Corporation, but the 1997 revision of the Oil Business Act legalized the direct import of LNG by private corporations for self-consumption, which began in 2005. The intent was to reduce industrial and electricity production costs, expand consumer fuel choice, and stimulate private investment in LNG infrastructure.
According to the Ministry of Trade, Industry and Energy and the Korea Gas Corporation, the domestic LNG import volume in 2023 is 44.12 million tons (t). Of this, LNG directly imported by private companies such as POSCO, SK, and GS accounts for 9.27 million tons, or about 21%. Although not yet counted, there are predictions that last year's direct import volume exceeded 10 million tons.
The volume of direct LNG imports is steadily increasing. In 2005, the volume of direct imports (330,000 tons) accounted for just 1.4% of LNG imports. The number of direct importers, which was only two companies, POSCO and SK E&S at that time, increased to 24 last year. This includes POSCO INTERNATIONAL, GS Caltex, Hanwha Solutions, S-Oil, Korea Midland Power, West Power, and South Power.
Private companies contributed to reducing national energy expenses by directly importing LNG at lower prices compared to the Korea Gas Corporation. Over the past 10 years (2014-2023), the average import price of LNG for private companies was $407.8 per ton, lower than the Korea Gas Corporation's price of $631.1 per ton. If the direct import volumes during this period are applied to the Korea Gas Corporation's import price, the total LNG import expense would increase by $10.5 billion (about 14.5 trillion won).
In the case of Korea Electric Power Corporation, it is estimated that the electricity purchase expense has saved more than 1 trillion won due to a decrease in the system marginal price (SMP), which can be seen as the wholesale price in the electricity market. In 2023, the SMP was lowered by 7.3 to 10.1 won per kilowatt-hour (kWh) due to direct LNG imports, which, when reflected, would reduce KEPCO's annual electricity purchase expense to between 1 trillion and 1.4 trillion won.
There are perspectives that private companies helped overcome the energy supply crisis by lending direct import volume or storage tank space to the Korea Gas Corporation. During the LNG supply crisis caused by the Russia-Ukraine war in 2022, GS Caltex and POSCO Energy sold 400,000 tons of direct import volume to the Korea Gas Corporation. With the Korea Gas Corporation's storage space fully utilized, some space at LNG terminals operated by private companies, such as Boryung and Gwangyang, was also rented out.
Some express concern that as the influence of private companies in the LNG market grows, the so-called 'cherry-picking' phenomenon may intensify. Unlike the Korea Gas Corporation, which has a stockpiling obligation, private companies may not import when global LNG prices are high, leading to selective purchasing that could cause instability in national energy supply. Ultimately, this increases the burden on the Korea Gas Corporation to purchase additional LNG at high prices to supply domestically.