South Korea's LNG Imports Decline 7.4%, Official Says

By Shinhye Kang

Nov. 26 (Bloomberg) -- South Korea, the world's second- biggest buyer of liquefied natural gas, cut imports of the fuel for a second month in October because of reduced demand from power producers, a government official said.

Imports of the cleaner-burning fuel declined to 1.81 million metric tons, down 7.4 percent from a year earlier, said the official who declined to be identified because the data haven't been released yet. Import costs increased by 70 percent to $860 a ton, or about $16.4 per million British thermal units, the official said today.

Gas demand from power producers dropped 10.7 percent to 844,313 tons in October as two coal-fired plants started operating. South Korea's capacity to generate power from coal- fired plants increased 7 percent this year, according to Korea Electric Power Corp., the country's biggest electricity producer.

``Power producers consumed less gas as new power plants that use cheaper coal came on-line,'' Kim Sang Gil, an investor relations official at Korea Gas Corp., the country's dominant natural-gas supplier, said by phone.

Power generation costs from coal-fired plants are 35.7 won (2 cents) per kilowatt while it costs 87 won to produce one kilowatt of electricity, according to the state-run Korea Energy Economics Institute.

South Korea imported four spot cargoes in October from Nigeria, Egypt and Trinidad & Tobago, the official said. The nation paid an average price of $752 a ton for the cargoes, more than twice the U.S. benchmark gas prices at Henry Hub, according to the official.

The country's LNG trade data are usually published on the Web site of the state-run Korea International Trade Association in the last week of the month.

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;