S.Korea's diversified LNG supply chain mitigates risks amid Australia's potential export limits

SEOUL, April 04 (AJP) - South Korea is facing potential supply chain disruptions for liquefied natural gas (LNG) as Australia, its largest LNG supplier, considers prioritizing domestic demand amid growing global uncertainties driven by the Middle East conflict.

While the government expects limited near-term impacts, broader concerns over global energy supply stability remain. In response, proactive measures by South Korean private energy firms, such as SK Innovation E&S and POSCO International, to diversify their supply chains are highlighting the country's crisis resilience.

Earlier this year, SK Innovation E&S began directly importing LNG from Australia's Barossa gas field, establishing a long-term supply base. Following a 1.6 trillion won equity investment, the company secured an annual supply of 1.3 million tons for the next 20 years, which accounts for about 3 percent of South Korea's total annual LNG imports. This marks the first instance of a South Korean private firm independently managing the entire LNG value chain, from exploration to import.

POSCO International is also expanding its long-term supply base, primarily focusing on North America. In 2024, the company secured a combined 1.1 million tons annually through 20-year contracts signed with Mexico Pacific (700,000 tons) and Cheniere Energy (400,000 tons). Deliveries from Cheniere, utilizing POSCO's dedicated LNG carrier, will begin in the second half of this year.

Furthermore, POSCO is strengthening its global LNG value chain. The firm invested 926 billion won in 2024 for the phase 4 development of a Myanmar gas field, which allocates 80 percent of its output to China. In Australia, Senex Energy—acquired by POSCO in 2022 for about 400 billion won—recently increased its annual output to 1.2 million tons.

This shift toward diversified private procurement is restructuring South Korea's LNG market. Currently, private companies handle about 30 percent of the country's 45 million tons of annual LNG imports, mostly for their own power generation, while the state-run Korea Gas Corp. handles the remaining 70 percent.

Industry officials note that compared to past structures reliant solely on state-run enterprises, this diversification shields South Korea from policy shifts in major supplier countries like Australia and Qatar. An industry official emphasized that for heavily import-dependent countries like South Korea, "early investments and expanded direct imports by private companies are becoming increasingly crucial in times of crisis."