[AirUP, On Site] Domestic Gas Supply at 35%... Energy Security 'Frontline' Incheon LNG Terminal

Korea Gas Corporation Incheon LNG Terminal
The 'Heart' of the Metropolitan Gas Supply System
World's Largest in Both Area and Capacity

[Asia Economy Sejong=Reporter Lee Jun-hyung] The Korea Gas Corporation's Incheon Liquefied Natural Gas (LNG) terminal located in Songdo, Incheon. Operating busily 365 days a year, this facility handles about 35% of the domestic supply of natural gas, a major energy source in South Korea. As the country's second LNG terminal, operational since October 1996, it is credited with laying the foundation for the expansion of gas imports. Additionally, two-thirds of the natural gas used in the Seoul metropolitan area, including Seoul and Gyeonggi Province, passes through the Incheon LNG terminal. This is why the Incheon LNG terminal is considered the heart of the metropolitan gas supply system.

The site covers an area of 1,486,000 square meters (approximately 450,000 pyeong), which is 1.8 times the size of Yeouido. There are 23 cryogenic LNG storage tanks installed on this site. The total storage capacity for LNG at once reaches 3.48 million kiloliters (kL; 1 kL = 1,000 liters). Both the site area and storage capacity are the largest not only in South Korea but also in the world.

The importance of the Incheon LNG terminal is growing steadily. This is because the demand for natural gas continues to increase under the carbon neutrality policy. Among existing fossil fuels, natural gas emits the least carbon. Renewable energy sources such as solar and wind power have significant fluctuations in power generation depending on environmental conditions, making it difficult for them to serve as baseload power sources. Nuclear power, which has near-zero carbon emissions, faces challenges in expanding due to low public acceptance. To reduce carbon emissions in line with international trends immediately, LNG is the only viable choice.

The Growing Importance of LNG in Carbon Neutrality

The increasing trend in domestic natural gas imports directly reflects the changing position of natural gas. According to the Ministry of Trade, Industry and Energy, last year’s natural gas imports reached 45.932 million tons, nearly 10 million tons more than in 2012 (36.184 million tons). Compared to the early days of natural gas imports in 1991 (2.758 million tons), when the government began importing natural gas after the oil crisis of the 1970s, the import volume has surged approximately 1,565% over the past 30 years.

The government is also increasing the share of gas power generation, thereby enhancing the importance of LNG terminals. This is because to achieve the '2030 Nationally Determined Contribution (NDC)'?which is just eight years away?the reliance on coal power must be drastically reduced. The 2030 NDC is a kind of 'interim goal' for achieving carbon neutrality by 2050, aiming to reduce greenhouse gas emissions by 40% compared to 2018 levels by 2030. The Ministry of Trade, Industry and Energy recently announced in the draft of the '10th Basic Plan for Electricity Supply and Demand' that it will convert 26 aging coal power plants with a total capacity of 13.7 GW into LNG power plants by 2036. Additionally, the government plans to build five new LNG power plants with a total capacity of 4.3 GW by 2036.

KOGAS is steadily increasing its natural gas storage capacity in line with government policies. From 2016 to last year, it invested 321.5 billion KRW to add three 200,000 kL storage tanks at the Incheon LNG terminal. Moreover, KOGAS broke ground last year to secure a new LNG terminal in Seokmun National Industrial Complex, Dangjin, Chungnam, by 2031. This will be the fifth LNG terminal following Pyeongtaek, Incheon, Tongyeong, and Samcheok. The plan is to build an LNG terminal with a storage capacity of 2.28 million kL on an 890,000 square meter (approximately 270,000 pyeong) site within the Seokmun Industrial Complex. The total project cost is estimated at 3.3265 trillion KRW.

Hee-bong Chae, President of Korea Gas Corporation, is delivering a keynote speech at the '2022 World Gas Conference' last May. [Photo by Korea Gas Corporation]

Strengthening Supply and Demand Management

KOGAS is also reinforcing its internal supply and demand management system. This is due to soaring international natural gas prices and increasing supply chain instability triggered by the Ukraine crisis. Initially, the LNG spot market customers were mainly Asian countries such as South Korea and Japan, but as European countries, which had their Russian gas supply cut off, entered the LNG spot market one by one, competition for purchases intensified. Accordingly, KOGAS made every effort to secure volumes tailored to winter energy demand during July and August and expects to fill all 77 storage tanks across four LNG terminals by around November.

Voices calling for a gas price increase have also grown amid the sharp rise in natural gas prices. Currently, the cost recovered by KOGAS through city gas rates accounts for only about 40% of the actual cost. KOGAS President Chae Hee-bong recently stated on social media that "International natural gas prices have skyrocketed to unprecedented levels, making it impossible for KOGAS to bear the cost burden any longer," and added, "A significant adjustment in city gas rates is necessary starting next month." President Chae also noted, "Excessive suppression of city gas rates causes distortions in energy prices and leads to overconsumption of city gas," and added, "The burden avoided by today's consumers will have to be borne by future generations."