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Natural Gas

South Korea's long-term gas demand to rise 1.7% annually; oil consumption to fall: ministry

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South Korea's long-term gas demand to rise 1.7% annually; oil consumption to fall: ministry

South Korea's natural gas demand is forecast to grow 1.7% annually on average to 35.3 million mt of oil equivalent in 2035, compared with 23.7 million mtoe in 2011, the country's Ministry of Trade, Industry and Energy said in a report released Tuesday.

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But the country's oil demand is expected to shrink 0.11% annually to 99.3 million mtoe in 2035, compared with 102.0 million mtoe in 2011, according to a draft version of the ministry's Energy Basic Plan.

The country's electricity consumption, meanwhile, is forecast to nearly double to 70.2 million mtoe in 2035, from 39.1 million mtoe in 2011, the report said, noting that the government will seek further power price hikes to curb growing demand.

The country's demand for coal for power generation is expected to increase 0.6% annually to reach 38.6 million mtoe in 2035, compared with 33.5 million mtoe in 2011, driven by stronger electricity demand.

South Korea's total energy consumption will likely gain an average of 0.9% annually to 254.1 million mtoe in 2035, from 205.9 million mtoe in 2011, the report said.

"The government plans to cut the country's total energy consumption by 13.3% from the 2035 forecast," it said. "The government will work to minimize a growth in the use of electricity by improving the price system and raising electricity rates," it added.

The outlook was produced by a joint task force comprising government officials and private sector experts, the ministry said.

The task force said nuclear power should be reduced to between 22% and 29% of overall electricity consumption by 2035, compared with a 2008 government plan to increase it to 41% by 2030, due to safety concerns triggered by a scandal involving fake certificates and substandard parts as well as Japan's Fukushima nuclear crisis.

"The ministry will consider keeping the electricity supply ratio of nuclear reactors at less than 29% given the changed circumstances and public opinions," it said. The government will "avoid both a rapid expansion and reduction of nuclear reactors as it still recognizes their importance," it said.

There are 23 nuclear reactors in South Korea that met about 30% of the country's total electricity consumption in 2012. Coal and LNG met 40% and 25% of power demand, respectively, last year, while oil accounted for 3%. The remaining 2% came from hydraulic and renewable sources such as solar, wind power and fuel cell power plants.

The government last month announced that it would lower consumption taxes on LNG and kerosene while raising taxes on coal used for power generation from July next year, as part of efforts to curb electricity demand.

"The government plans to finalize the energy basic plan after a public hearing and further discussion with related government agencies," Joo Young-Joon, director of the ministry's the energy and resources policy department, said in the report.

--Charles Lee,
--Edited by Deepa Vijiyasingam,