- June 15th, 2011
LNG Imports by Japan, South Korea Climb as Oil Costs Surge
Japanese power utilities and South Korean users bought a combined 6 million metric tons of liquefied natural gas in May, adequate to supply India for eight months, as oil cost almost twice as much as gas to burn.
South Korea paid an average $631 a ton delivered, equivalent to about $12 per million British thermal units, for imports in May, according to official data. Fuel oil cost about $16 while diesel was $22 on an energy equivalent basis, according to Bloomberg calculations based on today’s prices.
“South Korea’s gas consumption is driven by strong industrial demand,” said Tony Regan, a consultant with Tri-Zen International Ltd. in Singapore, in an e-mail today. “High demand will continue from the industry because of the growing price differential with diesel. It’s much cheaper to run gas.”
Power plants in Japan boosted purchases of the fuel by 28 percent from a year earlier to 3.7 million tons in May, according to data from the Federation of Electric Power Companies of Japan. South Korea increased total LNG imports by 22 percent to 2.4 million tons, according to the Korea Customs Service’s website.
India imported 12.15 billion cubic meters of the fuel last year, according to BP Plc’s Statistical Review of World Energy. That’s equivalent to about 8.9 million tons of LNG.
U.K. gas for July traded at 58.75 pence a therm yesterday, equivalent to about $9.50 per million Btu. The U.K. gas benchmark is typically used to price spot LNG cargoes to Asia.
An earthquake and tsunami damaged Japan’s nuclear and coal- fired facilities in March, forcing the nation to increase its reliance on natural gas. South Korea is using more gas because diesel and fuel oil, substitutes for LNG, are more expensive. Japan and South Korea are the world’s two biggest buyers of LNG, and accounted for a combined 46 percent of world consumption, according to calculations based on data by BP Plc’s Annual Energy Review.