Korea Gas Sales Fall on Lower Power Producer Demand

By Shinhye Kang

Sept. 8 (Bloomberg) -- Korea Gas Corp., the world's biggest importer of liquefied natural gas, said domestic sales of natural gas fell 14 percent in August as power producers increased cheaper coal-fired and nuclear generation.

Sales dropped to 1.3 million metric tons last month from a year earlier, the Seongnam, South Korea-based company said in a regulatory filing today.

Demand from power producers fell 31.5 percent to 610,073 tons in August after new coal and nuclear power plants started operating. Power generation costs at gas-fired plants are 87 won (8 cents) a kilowatt, more than double that of a coal-fired plant at 35.7 won and 34 won for nuclear power, according to the Ministry of Knowledge Economy.

``Three new power plants using coal or nuclear came on line, prompting power producers to switch to these relatively cheaper fuels from gas,'' said Kim Sang Gil, an investor relations official at Korea Gas.

Consumption of gas by households and businesses increased 10 percent to 694,419 tons. Gas sold directly to individual users remains about 30 percent cheaper than using fuel oil, according to Korea Gas.

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.