The latest blow to gas from a South Korean state-backed utility in face of global and regional decline in LNG demand 

July 22, 2024 (SEOUL) – South Korean state-owned utility Korea Midland Power (Komipo) has announced the cancellation of its 732 billion KRW plan to construct a major LNG terminal in Boryeong, citing falling gas demand and cost concerns. The board decided last month that “it is much more beneficial to suspend the project than to proceed.” 

The state-owned utility informed local media that “future LNG demand is projected to fall short based on South Korea’s 10th electricity plan.” To achieve carbon neutrality, the government has decided to reduce the share of LNG in electricity generation to 9.3% by 2036. Komipo also expressed concerns over a projected 22% increase in construction costs due to global inflation. 

The Boryeong LNG terminal, originally scheduled to start operating in 2028, was intended to increase South Korea's LNG terminal capacity by 400,000 kl, which is about 3% of the country's current capacity.  

The project was part of South Korea's 9th electricity plan, which aimed to replace retired coal plants with gas plants. Prior to the cancellation, the Boryeong project faced heavy criticism from environmental groups in South Korea over its misalignment with national climate and energy policies. 

“The latest decision from South Korea reflects a broader global trend of declining gas demand, including in Asia. As climate regulations tighten and renewable energy becomes more cost-competitive, LNG is losing viability and appeal in this region,” said Dongjae Oh, Head of Oil and Gas at Solutions for Our Climate. 

The International Energy Agency (IEA) forecasts a steep decline in global gas demand as clean energy transitions gain momentum. Gas demand in the Asia-Pacific region is already projected to decrease by 40% by 2050 based on current commitments. This downward trend is also evident in forecasts for Southeast Asia, which show a robust outlook for renewable energy adoption. 

“Major importers like South Korea and Japan are shifting away from LNG, evident in their latest energy policy shifts. Countries such as Australia and the United States, recklessly expanding gas production under the pretext of meeting Asia’s gas demand, will face significant challenges ahead.”  

ENDS. 

Solutions for Our Climate (SFOC) is an independent nonprofit organization that works to accelerate global greenhouse gas emissions reduction and energy transition. SFOC leverages research, litigation, community organizing, and strategic communications to deliver practical climate solutions and build movements for change.