IEA's Birol urges South Korea, other Asian LNG importers to diversify supply amid conflict

South Korea and other Asian LNG importers need to step up their efforts to diversify LNG supply sources amid the Middle East conflict and disruptions to traffic through the Strait of Hormuz, International Energy Agency Executive Director Fatih Birol said Sept. 17.

"Asia is at the forefront of the energy crisis the world is facing today," Birol said at a press conference in Seoul following an event to sign the Korea-IEA Resilient and Integrated Asian Energy Security Cooperation agreement, which is aimed at strengthening the capacity to respond to energy crises.

Birol warned that disruptions to Qatari LNG supplies to South Korea and other parts of Asia would tighten market conditions further this winter as European demand competed with Asian LNG buyers.

LNG supply "will be even tighter because Europe, another importer like Asia, cut ties with Russia, and Europe is also going to import more LNG this year," he said.

"It will be a harsh winter, as there may be competition between Europeans and Asians for buying LNG, which in turn may push prices even higher," Birol said, noting new projects in the US, Canada, Malaysia and Australia are expected to raise supplies in the coming years.

"LNG imports that still remain to be imported is to diversify them as much as possible, not to get them from one big exporter," the IEA chief said.

Birol's comments came as South Korea received no LNG from Qatar again in August, according to data from the Korea Customs Service amid renewed disruptions to transit through the Strait of Hormuz.

After receiving no LNG imports from Qatar in April, May or June, South Korea imported 90,611 metric tons from Qatar in July, according to the customs data.

Qatar was one of the biggest LNG suppliers to South Korea, accounting for 15%-20% of the Asian country's total LNG imports, the customs data showed.

On June 15, Qatar promised to resume LNG supplies to South Korea soon in a "stable manner," when Minister of Trade, Industry and Resources Kim Jung-kwan traveled to Qatar to meet his counterpart, according to a ministry statement.

Electrification

To avoid another supply disruption from the Middle East, Birol called on South Korea and other Asian nations heavily dependent on imports of crude oil and LNG to move toward electrification, the switch from fossil fuels to electric power.

Birol, who was in Seoul as part of an Asian tour that also included China and Japan, called for electrification to strengthen regional energy security.

"For Korea, my suggestion is moving in the direction of electrification and using as many renewable sources as possible, supported by nuclear power," Birol said, adding that the shift would help boost the country's energy security.

Under the bilateral cooperation, South Korea and the IEA will jointly monitor oil, LNG and clean-energy supply chains, as well as power-grid reliability, and build a shared crisis-response system incorporating early warning mechanisms and coordinated stockpiling.

At the press conference, Minister of Climate, Energy and Environment Kim Seong-hwan said South Korea will "accelerate the renewable energy transition and electrification to reduce reliance on imported fossil fuels, and build resilient power systems that can withstand surging power demand and a variety of shocks, including natural disasters."

Birol also met President Lee Jae-myung, who said South Korea has faced challenges in its transition to renewable energy sources due to the energy crisis sparked by the ongoing conflict in the Middle East.

The IEA chief praised the South Korean government for moving toward electrification, saying the initiative will not only support the country's sovereignty and economy but also contribute to efforts to respond to climate change.

"Because countries do not want to face such major problems again, they want to secure energy at home, and electrification is emerging as a major new policy in many countries," Birol said, noting that South Korea needs to put electrification at the center of its energy policy for the years to come.

The meeting was arranged as a follow-up to President Lee's proposal at the G7 summit in June to discuss ways to cooperate to strengthen the resilience of Asia-Pacific nations' energy supply chains, according to the Presidential Office.

Birol was visiting South Korea after traveling to Tokyo earlier in the week, when he met Prime Minister Sanae Takaichi and Minister of Economy, Trade and Industry Ryosei Akazawa on Sept. 14, following the APEC Energy Ministerial Meeting in Beijing on Sept. 10-11.

At the APEC Energy Ministerial Meeting, representatives of economies that account for more than half of global energy demand recognized that the global energy landscape was undergoing complex and profound shifts, accelerated by evolving market conditions, rapid technological advances and current energy disruptions, according to a joint statement.

The APEC energy ministers also recognized that conventional, zero-emission and low-emission energy sources and technologies provide a foundation for energy security and strong and sustainable economic growth, and that each economy will choose an energy mix consistent with its domestic priorities, according to the joint statement.