Korea Gas July Natural Gas Sales Rise 10% By Volume

By Shinhye Kang

Aug. 8 (Bloomberg) -- Korea Gas Corp., the world's biggest liquefied natural gas importer, said domestic gas sales rose 10 percent in July as high oil prices prompted utilities and industries to use more of the cleaner-burning fuel.

Sales increased to 1.62 million metric tons last month from a year earlier, the Seongnam, South Korea-based company said in a regulatory filing today.

South Korea, where inflation has reached a 10-year high, has kept gas prices unchanged while the cost of fuel oil surged 42 percent this year, according to data compiled by Bloomberg. Consumption of gas by households and businesses climbed 13 percent to 723,180 tons in July.

``Industrial users, not only power utilities, started to use more gas as the fuel is cheaper than fuel oil,'' said Kim Sang Gil, an investor relations official at the company.

Demand from power producers rose 7.9 percent to 900,717 tons in July after some plants used gas instead of fuel oil to generate electricity. Gas is 21.24 won per kilowatt cheaper than fuel oil for power generation, according to Korea Gas.

South Korea, the world's second-biggest LNG importer after Japan, imports all its gas in liquefied form. Korea Gas, which plans to import 26.4 million tons in 2008, supplies about two- thirds of its LNG to the domestic market between October and February when demand typically peaks.

LNG is gas chilled to liquid form, reducing it to one-six- hundredth of its original volume for transportation by tanker to destinations not connected by pipeline. On arrival it is turned back into gas for delivery to users such as power plants, factories and households.

To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net.