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.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
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.
Platts LNG Daily is vital reading as LNG supply dynamics continue to evolve in major markets including Japan, China, the Middle East, India, Australia, South America and the US. Click the link below to see how this publication can help meet your business needs.Free Trial
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, email@example.com
--Edited by Irene Tang, firstname.lastname@example.org