State-owned Korea Gas Corp is opposed to the involvement of private companies in the business of importing liquefied natural gas (LNG).
Sensing a worldwide boom in the LNG business, Korean companies are prepared to invest in facilities to import the fuel, currently monopolised by Korea Gas Corp. (Kogas).
Analysts told Korea Herald companies could save about 30% if they imported LNG themselves instead of relying on Kogas.
For the first four months of the year, Korean reliance on LNG rose to 16.3% from 11% last year.
LNG accounted for 7.32% of the country’s energy mix in 1996, 9.11% in 1999 and 10.22% in 2002. In addition, LNG is used to produce more than two-thirds of household gas.
Once private companies begin supplying their own LNG at slashed prices, the newspaper said they will inevitably demand that Kogas lower its import prices.
Kogas, however, is not in a position to lower its prices because of the long-term contracts it signed with developers more than a decade ago.
This means the corporation may have to raise the price of its household LNG to compensate for the loss.
“If companies begin freely importing and distributing LNG, it will cause the price of industrially used LNG to go down. This means we may have to cover the loss by raising household LNG prices,” said Kim Bong-ho, Kogas spokesman.