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S. Korea Becomes the Largest Importer of U.S. LNG
Import Diversification of Energy Resources
S. Korea Becomes the Largest Importer of U.S. LNG
  • By Jung Suk-yee
  • September 27, 2018, 10:00
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South Korea imported 110.4 billion cubic feet of LNG from the U.S. in the first half of this year, equivalent to 22.5% of the nation’s total import.

South Korea has emerged as a major importer of U.S. energy resources amid the Donald Trump administration's strong push for resource exports such as LNG.

According to the U.S. Energy Information Administration, the U.S. exported 110.4 billion cubic feet of LNG to South Korea in the first half of this year, equivalent to 22.5% of the nation's total LNG imports. In that period, South Korea became the largest importer of U.S. LNG by beating Mexico, which imported 105.5 billion cubic feet. Mexico was followed by China (61.9 billion cubic feet), Japan (44.2 billion cubic feet), and India (31.5 billion cubic feet).

Last year, South Korea’s LNG imports from the U.S. totaled 130.2 billion cubic feet. In 2016, the amount had been merely 10.2 billion cubic feet. This year’s imports are estimated to exceed 200 billion cubic feet given that the highest demand for natural gas is generated in winter.

The Korea Gas Corporation signed a long-term contract in 2012 to import 2.8 million tons of LNG a year from the Sabine Pass Terminal located in Louisiana. The actual delivery was initiated last year. From next year onwards, private companies such as GS EPS and SK E&S are going to import U.S. LNG as well.

According to industry sources, the Henry Hub, which is an index of the U.S. LNG price, is independent of oil prices, unlike most of the LNG previously imported by South Korea and, as such, U.S. LNG can be an effective tool against high oil prices. In the first half of this year, the reference LNG price in Asia was US$9 to US$10 per MMBtu, but the U.S. LNG price has remained at US$3 or so for years.

Likewise, crude oil imports from the U.S. are on the rise. According to the Korea National Oil Corporation, 9.7% of the crude oil imported by eight South Korean oil refining companies, such as SK Energy and GS Caltex, was from the American continent in July this year. The ratio had been 4.5% in February this year.

This has to do with the price competitiveness of U.S. shale oil, which is rising along with international oil prices, production limitation by OPEC member countries, and U.S. sanctions on Iran. In the futures market, the WTI and Dubai Crude Oil prices were US$72.28 and US$77.14 per barrel on September 25, respectively.