Gas Corporation Accelerates New Business in 'LNG Bunkering'

Completion of Four LNG Loading Facilities, the Only Ones in Korea, and Infrastructure Development in Tongyeong

The 'SM Jeju LNG No. 2,' Asia's first liquefied natural gas (LNG) bunkering dual-purpose vessel, is conducting a ship-to-ship (STS) loading demonstration test. (Photo by Korea Gas Corporation)

[Asia Economy Reporter Moon Chaeseok] Korea Gas Corporation announced on the 15th that it is actively promoting a new business of supplying liquefied natural gas (LNG) as ship fuel, called 'LNG Bunkering.' If this business of supplying LNG as fuel to ships becomes active, the number of ships using eco-friendly fuel is expected to increase.

The impetus for the project was international shipping regulations. The International Maritime Organization (IMO) decided to reduce the sulfur content in all ship fuels from the existing 3.5% or less to 0.5% or less starting this year. Accordingly, global demand for LNG bunkering is expected to increase to 20 to 30 million tons by 2030.

KOGAS has begun building infrastructure for the LNG bunkering business. In the process, the 'STS (Ship to Ship)' method, which supplies fuel through ships, will mainly be used.

Securing LNG storage facilities, bunkering vessels, and loading facilities is essential. KOGAS, which owns the world's largest natural gas facilities, completed four LNG loading-only facilities at the Tongyeong LNG base, the only ones in Korea.

Next, it built the national LNG No. 29 vessel, 'SM JEJU LNG 2.' It is Asia's first 'LNG bunkering dual-purpose vessel.' It is equipped with LNG supply facilities for ship fuel and operates using the STS method.

Last month, it completed the world's first 'STS LNG loading demonstration test' at Daewoo Shipbuilding & Marine Engineering's Okpo Shipyard. It is establishing joint ventures with cargo owners, refining, port, and logistics companies to secure initial demand.

In July, KOGAS held a 'LNG Bunkering Joint Venture Establishment Agreement Signing Ceremony.' Participants include Busan Port Authority, POSCO International, S-Oil, and Daewoo Logistics. The joint venture will lead the import, storage, shipment, and supply of natural gas.

Through the joint venture, KOGAS plans to sell 1.36 million tons of LNG for ships and achieve sales of about 1 trillion won by 2030. It was also selected by the government as the executing agency for the 'LNG Bunkering Vessel Construction Support Project.'

In September, the Ministry of Trade, Industry and Energy designated a consortium led by KOGAS (to be executed by the joint venture) as the executing agency for the LNG propulsion ship construction activation project. This project will provide 15 billion won in government subsidies for the first time in Korea to build an LNG bunkering dedicated vessel. By the end of 2022, one LNG bunkering dedicated vessel with a cargo hold capacity of 7,500㎥ or more will be constructed.

By securing additional LNG bunkering dedicated vessels through this project, concerns about unstable fuel supply will be resolved, and the construction of LNG propulsion ships is expected to increase in the future. This will lay the foundation for the revival of the stagnant domestic shipbuilding industry and enhance port competitiveness.

A KOGAS official said, "KOGAS will contribute to the early activation of the bunkering industry through leading investments in the LNG bunkering field," adding, "We plan to expand various eco-friendly fuel transition projects and lead Korea into a low-carbon, eco-friendly energy era."