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South Korean Kogas' Oct LNG sales posts sharpest rise in more than 8 years

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South Korean Kogas' Oct LNG sales posts sharpest rise in more than 8 years

London — South Korean state-owned Korea Gas Corp.'s LNG sales surged 37.9% year on year in October driven by strong demand for power generation, company officials said Monday.

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The 37.9% rise was the biggest increase in more than eight years since April 2010 when LNG sales surged 49.8% from a year earlier.

Kogas, which has a monopoly in domestic natural gas sales, sold 2.59 million mt last month, compared with 1.87 million mt a year earlier.

It marked the 11th consecutive month of increase in the company's LNG sales since December last year.

The October sales were also up 40.5% from 1.84 million mt sold in September.

Kogas did not disclose how much LNG it sold for the first 10 months this year, but S&P Global Platts calculations based on Kogas' previous reports showed it sold 28.83 million mt over January-October, up 18.6% from 24.30 million mt in the same period last year.

Of the utility's total LNG sales in October, purchases by power generators surged 52% year on year to 1.22 million mt. Sales to retail gas companies for households and businesses climbed 27.4% year on year to 1.36 million mt in October.

Kogas attributed the increase in LNG sales in October to higher operation of natural gas-fired power plants in line with President Moon Jae-in's push to reduce the country's heavy reliance on coal and nuclear in power generation.

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Under Moon's push to boost nuclear safety, seven of the country's 24 nuclear reactors have been shut for maintenance, which boosted LNG consumption for power generation, a Kogas official said.

To meet the growing demand, Kogas increased LNG imports by 13.7% year on year to 27.77 million mt over January-September, compared with 24.43 million mt a year earlier.

"Kogas' LNG sales are expected to remain strong next year on the back of the government's push for energy transition from coal and nuclear to renewables and LNG," a company official said.

The government is considering cutting the import tariff on LNG to zero next year from 2%-3% currently to ease consumers' financial burden and boost consumption of the cleaner fuel.

South Korea currently levies a 3% tariff on LNG imported during the peak winter season from October to March, and 2% during the rest of the year. LNG is used for heating and power generation in South Korea.

The government is also considering a cut in consumption tax on LNG by 74.8% to Won 23/kg (2 cents/kg) from April next year, while raising taxes on coal for power production by 27.8% to Won 46/kg so as to boost LNG's competitiveness.

The government raised the tax on thermal coal by 20% to Won 36/kg in April this year.

In line with the government's new energy policy, Kogas unveiled a massive investment plan last month in which it will spend Won 10 trillion ($8.8 billion) by 2025 to expand its LNG storage capacity and overseas upstream projects so as to ensure stable supply of the fuel.

--Charles Lee, newsdesk@spglobal.com

--Edited by Irene Tang, newsdesk@spglobal.com