Page 8 - AsianOil Week 44

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South Korea’s oil and gas demand declines
PERFORMANCE
SOUTH Korea’s oil and gas demand is in decline, with the country re-embracing nuclear and coal in the power sector while introducing policy measures curbing demand for transportation fuels.
The country’s gasoil consumption shrank by 20% year on year in September to 10.86mn barrels, S&P Global Platts reported this week citing state-owned Korea National Oil Corp. (KNOC) data. This was, the news service noted, the sharpest contraction in demand since con- sumption dropped 25.8% y/y in June 2008. Gasoline demand, meanwhile, slid 15.8% y/y to 5.76mn barrels.
Tougher environmental regulations, such as banning older diesel-fuelled trucks from city centres, will hurt gasoil demand going forward. Higher retail gasoline prices following Seoul’s move to scrap tax cuts for transportation fuels on September 1 have also deterred shoppers and are likely to continue doing so.
Furthermore, the country’s slowing eco- nomic growth, which the International Mon- etary Fund (IMF) has revised to 2% for this year from its previous outlook of 2.6%, will also squeeze demand for auto fuels.
At the same time, South Korean demand for liquefied natural gas (LNG) is projected to con- tract over the next five years. While demand hit an all-time high of 44mn tonnes in 2018, Reuters reported this week that analysts anticipated a dip in the years ahead as new nuclear and coal-fired power generation comes online.
One nuclear reactor came online in August, another is due to start up this year and three more are due online by 2024, Reuters said citing data from Korea Power Exchange. The newswire added that seven large coal-fired power plants were set to start operations by 2022.
Nuclear reactors accounted for 27.4% of the country’s power generation in the first eight months of the year, up from 22.3% a year ago,
Reuters said citing data from Korea Electric Power. Gas power generation eased from 27.6% to 25.1% in the same timeframe.
Changing power supply patterns have already seen LNG imports fall 8.3% y/y to 29mn tonnes, according to customs data. Energy consultancy Wood Mackenzie, meanwhile, predicts a 9% drop in the country’s full year imports.
“As we move through the early 2020s, LNG will come under pressure in the power sec- tor as new coal-fired power capacity starts up and imports will fall towards 36mn tonnes per annum,” senior Wood Mackenzie analyst Lucy Cullen said.™
OCEANIA
PNG commission delays UBS oil loan inquiry
POLICY
A Papua New Guinea (PNG) government commission set up to investigate a A$1.2bn ($827.3mn) loan from UBS that the former administration used to buy into Oil Search has once again delayed its inquiry.
Chairman Salamo Injia said on November 4 that the commission had not received the fund- ing the government had promised in September. Injia added that the inquiry still had not com- pleted a tender to hire an international law firm. This is the commission’s second delay, with Injia
having originally postponed the start of proceed- ings in October.
“Until these and other outstanding adminis- trative arrangements are completed by the gov- ernment agencies and officers concerned, this Commission is unable to sit today and is unlikely to sit any time soon,” the chairman said.
PNG Prime Minister James Marape had previously agreed to Injia’s requests to extend the inquiry’s duration from three to six months, increase its budget and appoint an international
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w w w . N E W S B A S E . c o m Week 45 06•November•2019