Good for FCEL and Posco
S Korea's Kogas expects 2013 domestic
S Korea's Kogas expects 2013 domestic LNG sales to rise on stronger power demand
Seoul (Platts)--12Aug2013/517 am EDT/917 GMT
State-owned Korea Gas Corp on Monday said domestic LNG sales for 2013 could increase on stronger power demand compared to its earlier forecast of 36.548 million mt, which reflects a 3.6% jump from 2012.
Kogas and the country's energy ministry ruled out any LNG supply shortages, stressing they are "well prepared for any situation."
This news emerged amid expectations of a further rise in August domestic consumption of LNG for power generation, boosted by higher demand as summer temperatures peak and a decline in both coal-fired and nuclear power generation.
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The Ministry of Trade, Industry and Energy issued a warning for possible power shortages on Sunday as high temperatures led to a sharp increase in power consumption. The country's power reserve is expected to drop to as low as 1,800 MW for the next several days, far below what is considered a safe level -- 4,000 MW.
Just after the warning, two coal-fired power plants were closed due to mechanical problems, according to the ministry on Monday. A 500-MW generator at a coal-fired plant in Dangjin on the west coast was turned off Sunday night due to problems at its turbine. It will not be able to restart at least until next week, the ministry added.
Another coal-fired generator with a capacity of 200 MW at nearby Seocheon was taken offline early Monday. It resumed operations after an hour, but is only working at half its capacity, according to the ministry.
TEMPERATURES TO PEAK THIS WEEK, BLACKOUTS POSSIBLE
Minister Yoon Sang-Jick Sunday warned that minor problems at any of the power plants this week could lead to blackouts, noting that the country's electricity consumption is expected to reach its annual peak in the first three days of this week.
"The country's maximum electricity demand per hour is expected to hover above 80,000 MW this week, 300 MW higher than last year's peak, and far exceeding its hourly power generation capacity of 77,400 MW," Yoon said in a statement.
Yoon called for all-out national efforts to save electricity and ordered state power monopoly Korea Electric Power Corp. and state-run power generators to mobilize all contingency plans to head off a power shortage, which include production of more electricity from gas-fired plants.
RELIANCE ON GAS-FIRED GENERATION TO RISE
Under the current power trading formula, Kepco's six power generating subsidiaries, such as Korea Hydro & Nuclear Power -- the operator of nuclear power plants -- and five coal- and gas-fired units, are providing power as "base-load generators." As power demand grows, Korea Power Exchange, the state-run power distributor, will increase power purchases from private generators fired by the more expensive fuel -- gas.
The total capacity of private generators is 9,788 MW and they are all gas-fired. Given Kepco's total power generation capacity of 68,654 MW, including nuclear, the portion of private generators' capacity stands at 12.3% of the country's total capacity of 78,492 MW.
The private generator's LNG portion is 41.5% of the country's total LNG capacity of 23,611 MW including Kepco's 13,823 MW.
Private generators includes the 3,366 MW of capacity from the country's top steelmaker Posco; SK E&S, an affiliate of top refiner SK Innovation, with 1,907 MW; GS EPS and GS Power, affiliates of the country's No 2. refiner GS Caltex, with 1,503 MW and 950 MW, respectively.
On the back of stronger power demand, Kogas' domestic LNG sales have been on the rise. Its sales of LNG in July rose 13.8% to 2.57 million mt, marking year-on-year growth for four consecutive months. The company sold 23.17 million mt in the first seven months of the year, up 6.1% from 21.82 million mt in the same period last year. The company attributed the increased sales to strong demand for electricity generation following the shuttering of nuclear reactors.
The country has been struggling daily to keep its power reserve at a safe level since it was forced to shut down two nuclear reactors for substandard parts used under fake quality certificates years earlier, Platts previously reported.
South Korea has 23 nuclear reactors that are operational, but six of them are currently turned off for maintenance or inspection. The country's 23 reactors supplied about 30% of the country's total electricity consumption in 2012. Coal and LNG met 40% and 25% of power demand, respectively last year, while oil accounts for 3%. The remaining 2% came from hydraulic and renewable sources such as solar, wind power and fuel cell power plants. Less
