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S.Korea power producers call on govt to offset rising gas prices
September 29, 2017 / 7:48 AM / 18 days ago

S.Korea power producers call on govt to offset rising gas prices

* Higher gas prices have pushed up cost of using the fuel

* Some utilities want government help to offset expense

* S.Korea aiming to use more LNG, shift away from coal

By Jane Chung

DAEGU, South Korea, Sept 29 (Reuters) - Some South Korean power producers are calling on the government to take steps to help offset climbing gas prices, with the cost of generating electricity from the fuel twice that for coal.

Rising gas costs in the world’s No.2 importer of the commodity are undermining government efforts to boost power generation from cleaner sources than coal, which has been the nation’s primary source of electricity for decades.

Seoul has been lining up plans to lift its power production capacity by up to a tenth by 2030, mostly using liquefied natural gas (LNG) and renewable energy.

“To increase gas power generation, the government needs to come up with measures to guarantee gas power operators’ profits and ease the burden of LNG price hikes,” Park Won-ju, director of the Independent Power Producer Association, said this week on the sidelines of an industry conference.

It cost 46,404 won ($40.52) per giga calories (gcal) to burn LNG to generate electricity in August, compared to 21,564 won per gcal from coal, according to data from Korea Power Exchange.

In the first eight months of 2017, state-run Korea Gas Corp , the country’s sole wholesaler, sold 20.73 million tonnes of gas, down about 2 percent from last year, Reuters calculations based on KOGAS sales data showed.

For power generation, KOGAS sold 9.01 million tonnes over that period, down almost 7 percent from the same time last year.

“(Measures to blunt the impact of rising gas prices) are not set in stone for the moment, and this is a matter to review when the next energy mix plan is out,” said Nam Kyung-mo, director of the electricity market division at the Ministry of Trade, Industry and Energy, when contacted by Reuters.

Meanwhile, the energy ministry said in a statement this week that it was in talks with power companies to convert four newly built coal energy plants, with a combined capacity of 3.26 gigawatts, to gas-fired power facilities.

That would potentially spark more demand for gas in the domestic market, putting further upward pressure on prices.

“If the four coal power plants are switched to gas-fired ones, that will intensify competition between gas power operators,” said Park at the Independent Power Producer Association. ($1 = 1,145.1900 won) (Reporting By Jane Chung; Editing by Gavin Maguire and Joseph Radford)

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