South Korea urges Australian LNG producers to act

Jan 25, 1997 01:00 AM

South Korea is looking to reduce its reliance on oil as its main energy source in favour of alternative fuel sources, particularly natural gas. Ho-Kyong Kim, general secretary of the Korea Gas Union, said Australian LNG producers had to date shown little interest in supplying the South Korean market. He warned that Australia could be left out in the cold by its competitors. "In my opinion, it is high time that Australia hurried to propel the LNG production and sales contracts with Korea more positively, given the certain gas demand of Korea,'' Kim told delegates at an oil and gas conference. "If Korea, which is searching for other LNG resources, commits contracts with other countries, in my estimations there will be no room for Australia to penetrate into the Korean market for the future,'' Kim said. Kim said South Korea was particularly dependent on LNG, because it has no gas reserves itself, and the division of the Korean peninsula effectively makes the country an island.
South Korea's primary energy consumption is forecast to grow to 287.5 million tons of oil equivalent by 2010, from 150.4 million tons in 1995. Under South Korea's long-term energy supply plans, Kim said the country's reliance on oil as a proportion of primary energy demand is expected to fall to 51 % by 2005, from 62.5 % currently. LNG demand, meanwhile, is expected to grow during the period to account for 12 % of total demand, from 6.1 % in 1995. However, Kim believes South Korean gas demand would grow more quickly than anticipated. He noted that gas demand has been growing faster than forecast, at 25 % a year between 1991 and 1995. Current forecasts suggest South Korea's annual LNG demand will rise to 28.6 million tons by 2010, from 17.8 million tons in 1996. Kim, however, expects demand will be closer to 35 million tons by that year. He said a nation-wide "gas loop pipeline" is scheduled to be completed by 1998, with a branch network established by 2000. "Extension of this natural gas pipeline will accelerate natural gas consumption in the major cities," he said.
Australia currently has only one LNG project, the North West Shelf joint venture offshore Western Australia. Australia's BHP and US Phillips Petroleum are negotiating to develop an LNG operation in the Timor Sea. Meanwhile, another joint venture including Mobil, Chevron, Texaco, and Shell is planning an LNG development also offshore Western Australian, and possibly in co-operation with the North West Shelf project. The North West Shelf participants include BHP, Chevron, Shell, British Petroleum, and a Japanese consortium including Mitsui and Mitsubishi.

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