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South Korea bumps up LNG spot market purchases
MARKETS
SOUTH Korea is taking steps to purchase more LNG on the spot market in order to bump up inventories before winter, the Ministry of Energy said earlier this week.
The country is expecting domestic demand to rise in the coming months and is planning to increase stocks to levels of 90% by November, according to the ministry. Current stock levels are about 34% after a big summer drawdown.
Summer heat waves caused greater power demand and now the government is preparing for any uncertainties that may arise with the ongoing war in Ukraine. South Korea’s quest for more LNG may impact that of Europe, which is also looking to increase gas stocks in light of the deep reduction in gas supplies that normally arrive from Russia. The war has caused a steep rise in global LNG prices as countries around the world have sought to line up more non-Russian cargoes.
The ministry reported that state-owned
Korea Gas Corporation started buying spot LNG in April and had purchased 3.5 million tons in July, adding that current inventories stand at around 1.81 million tons, which is above the minimum level of 910,000 tons that Korea main- tains for winter.
According to the ministry, the country will use spot purchases, short-term contracts, imports of LNG from overseas assets and possi- bly swapping volumes with private importers to meet its inventory goals.
South Korea, which is the world’s third-larg- est importer of LNG, bought 16.6 million tons of spot LNG in 2021, according to Bloomberg, citing the International Group of LNG Import- ers. The agency said traders reported that Korea Gas had bought more than 20 LNG cargoes over the last few weeks for winter delivery. According to the report, Korea Gas is looking to purchase another 10 million tons by the end of the year.
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