Korea’s imports up as Kogas seeks to avoid winter of discontent
Korea imported a total of 1.76 million tonnes of LNG in July, a 23% increase on the same month last year. This was due to higher domestic demand and import monopoly Kogas’ attempts to build storage inventories in time for the winter, import data published by the Korean International Trade Association (KITA) showed.
In contrast to Japan and China, Kogas’ July spot and short-term buying from the Atlantic basin was limited to only one 0.061 million tonne cargo from Equatorial Guinea, for which it paid $16.61/MMBtu.
Instead, a 57% year-on-year rise in July volumes imported from Qatar to 0.68 million tonnes accounted for most of the increase (see graph). Kogas is known to have secured an additional short-term deal running until December this year above its long-term contractual volumes from the producer.
Overall Korean buyers paid an average of $777/tonne, or $14.94/MMBtu for LNG delivered last month.
Kogas paid the highest price of $20.87/MMBtu under its oil-indexed contract with Indonesia’s Pertamina and the second highest price of $17.34/MMBtu to Brunei LNG, under a renegotiated price formula introduced in April.
The lowest priced LNG at $3.61/MMBtu came from Egypt, where BP continues to make up contractual volumes to POSCO and K-Power before the delayed Tangguh plant comes online later this year.
Looking balanced for winter?
Overall Kogas and the independent importers have purchased 16.98 million tonnes in the first seven months of the year, up 15.2% on the same period the previous year.
The data suggests that Kogas’ plan to keep inventories high through spring and summer to avoid dependence on the high-priced winter spot market, when its seasonal demand is strongest, has been partially successful.
However, the increase in buying has also tapped into shorter-term needs. The higher crude prices mean domestic demand for gas, for which prices have been frozen since November, has surged as power producers and industrial city gas users switch to the fuel.
Kogas’ July sales accounted for 1.62 million tonnes of LNG, up 10% year-on-year, the company said this month. Sales for the first seven months were up 9.5% year-on-year to 16.26 million tonnes.
In an attempt to offset its seasonal dependence, Kogas has completed three new full containment LNG tanks this year: Two 140,000 m3 tanks at the Pyeongtaek terminal and one 200,000 m3 tank at Incheon. This takes the country’s combined LNG storage capacity to 5 million cubic metres.
However, four of the six 200,000 m3 tanks at the Incheon terminal are still offline, a Kogas source confirmed, with two due to return to the grid on 1st November and two more to return to service on 1st January 2009.
To fill the gap, Kogas has apparently taken to buying floating storage for winter. Lloyd’s MIU AIS shipping data showed the 145,000m3 NYK-Sovcomflot vessel, Grand Elena, which loaded at Trinidad earlier this week, is due to arrive in Korea on 30th November. A source at Kogas was unable to confirm the accuracy of the shipping data.
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