‘LPG 1위’ SK Gas, LNG New Business Full-Scale Launch... 8 Trillion KRW Sales Target

Addition of New LNG Business to Existing Core LPG Business
Overcoming LPG Industry Limits through Business Diversification
"Will Become LNG Import, Storage, and Supply Operator in 2024"

LNG storage tank under construction at Korea Energy Terminal (KET) in Ulsan. Construction of the third LNG storage tank will begin next month. Photo by Seoyoon Choi sychoi@

[Asia Economy Reporter Choi Seoyoon] SK Gas, which earns 100% of its sales from the LPG business, has identified LNG as a future growth engine and has begun full-scale commercialization.

According to the industry on the 24th, SK Gas is accelerating the construction of LNG infrastructure with the Ulsan region, home to the largest industrial complex in Korea, as a strategic hub.

SK Gas, together with Korea National Oil Corporation (KNOC), is constructing the Korea Energy Terminal (KET) at Ulsan North Port, aiming to start commercial operations in 2024. This is a core infrastructure that enables LNG import, storage, and supply all at once. Tanks with a total capacity of 2.73 million barrels, including 1.38 million barrels for petroleum products and 1.35 million barrels for LNG, are being installed, and near the tanks, there is a pier capable of docking and unloading three fuel transport ships simultaneously. Currently, tanks 1 and 2 are under construction, and additional demand is continuously being secured.

The LNG business based on KET has secured various demand sources. SK Gas is currently investing about 1.4 trillion KRW in Nam-gu, Ulsan, to build the world’s first LNG-LPG combined thermal power plant, Ulsan GPS (Gas Power Solution), with a capacity of 1.2GW. Scheduled for commercial operation in 2024, Ulsan GPS plans to use approximately 800,000 tons of LNG annually and aims to enhance business profitability through direct import via KET. Ulsan GPS will serve as a solid fixed demand source for SK Gas’s LNG business, supporting the LNG business while laying the foundation for business expansion into electricity and power generation.

SK Multi-Utility, an LNG combined heat and power plant, is also planned to be supplied with LNG. SK Multi-Utility is converting its existing aging coal combined heat and power facilities to LNG, marking the first case among domestic industrial complex district energy operators to switch fuel from coal to LNG. The newly established LNG combined heat and power plant will have a capacity of 300MW, which corresponds to using about 300,000 tons of LNG annually. This plant is also under construction with a target completion in 2024.

Founded in December 1985 and celebrating its 37th anniversary this year, SK Gas is the number one LPG company in Korea. As of last year, SK Gas held a 43.4% share of the domestic LPG market. During the same period, it recorded sales of 6.5 trillion KRW, all from the LPG business.

As the LPG industry enters maturity, SK Gas is overcoming the limitations of its existing business by expanding its business portfolio. Earlier, SK Gas announced a financial story outlining its future growth strategy last year, declaring its transformation into a ‘Net Zero Solution Provider’ that prepares for the carbon-neutral era and provides energy solutions to help customers and the global community achieve net zero.

SK Gas LNG Business Model. Photo by SK Gas

As a stepwise strategy to achieve its vision, SK Gas announced plans to add the LNG business to its existing core LPG business to provide low-carbon solutions and to transition its business portfolio to the zero-carbon hydrogen business in the future.

Besides supplying LNG to customers, the LNG business plans to utilize LNG cold energy for liquefied hydrogen production and LNG-extracted hydrogen, playing a key role in SK Gas’s entry into the hydrogen business.

SK Gas plans to build LNG business infrastructure in Ulsan, achieve economies of scale, and then produce hydrogen at low cost based on this to transition its business portfolio to the hydrogen business. The decarbonization and transition to the hydrogen era of industrial companies in Ulsan are expected to proceed rapidly.

SK Gas has set a goal to grow into a major LNG player in Northeast Asia by 2030 and achieve LNG business sales of 8 trillion KRW. The company plans to expand its LNG business based on the capabilities accumulated over more than 40 years in the LPG business. SK Gas stated, "Starting in 2024, we will actively promote the LNG business as an LNG operator capable of import, storage, and supply."