Natural Gas Demand Expected to Decrease by 16% by 2036... Stabilization of Import Prices

Joint Purchase with Private Sector and Diversification of Import Countries
Portfolio Composition of Long-term, Short-term, Mid-term, and Spot Contracts
Storage Capacity up to 19.98 Million ㎘, Securing 5,840 km of Supply Pipelines

Domestic natural gas demand is expected to decline at an average annual rate of 1.38% from this year until 2036. The government plans to strengthen cooperation between Korea Gas Corporation and private companies to stabilize natural gas import prices, and to establish a portfolio of long-term, short-term, medium-term, and spot contracts to enable flexible responses to domestic and international supply fluctuations. Spot contracts centered on natural gas price indices will pursue diversification of price indices, including contracts linked to oil prices.

The Ministry of Trade, Industry and Energy announced on the 27th the confirmation and public notice of the "15th Long-term Natural Gas Supply and Demand Plan," which includes long-term natural gas demand forecasts from 2023 to 2036, corresponding natural gas import strategies, supply and demand management, and infrastructure expansion plans. The long-term natural gas supply and demand plan is established every two years in accordance with the City Gas Business Act. This plan was prepared starting in April last year through the Gas Supply and Demand Committee composed of private experts and sector-specific working committees (demand forecasting, facility planning).

According to the Ministry of Trade, Industry and Energy, total natural gas demand (base demand) is expected to decrease by 16.4%, from 45.09 million tons this year to 37.66 million tons in 2036. This corresponds to an average annual decline of 1.38%. Demand for city gas is expected to increase, while demand for power generation is expected to decrease. City gas demand is projected to rise from 22.20 million tons in 2023 to 26.57 million tons in 2036 (an average annual increase of 1.39%) due to increased industrial demand despite a slowdown in household and general demand growth. Power generation demand is expected to fall from 22.89 million tons in 2023 to 11.09 million tons in 2036 (an average annual decline of 5.42%), based on the power source composition outlined in the 10th Basic Plan for Electricity Supply and Demand.

This supply and demand plan also forecasts "supply and demand management demand" to stably manage the volatility of city gas and power generation natural gas demand, following the 14th plan released in 2021. The Ministry projects total natural gas demand for supply and demand management to decrease slightly from 46.62 million tons in 2023 to 45.80 million tons in 2036 (an average annual decline of 0.14%). Supply and demand management demand will be used for expanding natural gas infrastructure such as gas storage facilities and for long-term natural gas import contracts when necessary.

Based on the forecasted long-term demand, the Ministry will pursue diversification of import countries to minimize natural gas supply and demand instability in case of supply disruptions from specific regions, considering supply stability and price stability.

To secure domestic natural gas supply stability, the Ministry will also strengthen demand management and enhance management capabilities during supply crises. To strengthen natural gas demand management, the Ministry plans to actively utilize liquefied petroleum gas (LPG) heating equipment and mixed operation, and expand city gas demand reduction programs. In the event of a national supply crisis, joint responses among public and private related agencies will be reinforced, and the Korea Gas Corporation’s mandatory stockpile volume will be flexibly adjusted to respond stably to unexpected demand increases such as severe cold waves.

The Ministry plans to actively utilize next-generation pipeline inspection robots and water drones, and to advance the smart pipeline inspection management system to improve the efficiency of pipeline and conduit safety management. For areas without city gas supply, LPG pipeline network projects targeting rural towns and townships will be promoted in the future through preliminary feasibility studies, considering regional demand and economic viability.

Additionally, to revitalize the liquefied natural gas (LNG) bunkering business, a new tariff system for ship-use natural gas operators will be established, and installation standards for cold energy pipelines outside LNG production bases will be prepared.

The Ministry also announced plans to secure 19.98 million cubic meters of domestic long-term natural gas storage facilities by 2036. For supply facility expansion, the Korea Gas Corporation’s 5th base (Dangjin base), which began construction in 2020, will be expanded to 2.7 million cubic meters by 2030, with 1.08 million cubic meters planned to be secured by the year after next. Cheon Young-gil, Director of the Energy Policy Office at the Ministry, explained, "Demand will rise until 2028 and then gradually decline." However, to prepare for rising demand, storage facilities will be secured up to 19.98 million cubic meters and supply pipelines up to 5,840 km.

A Ministry official said, "Due to supply risks caused by the Russia-Ukraine war and other factors, stable supply and demand of natural gas has become more important. Therefore, from this natural gas supply and demand plan, supply and demand management demand will be used as a basis for long-term import contracts when necessary, and mandatory stockpile volumes will be flexibly adjusted during supply crises to strengthen supply stability."

LNG Carrier Photo by Yonhap News

This content was produced with the assistance of AI translation services.