According to KOGAS, a vessel carrying LNG produced through the LNG Canada project arrived at the Incheon base on June 3. This shipment departed from the Kitimat liquefaction terminal on Canada’s west coast on May 20 and crossed the Pacific Ocean to reach South Korea. While LNG Canada shipments previously arrived at the Tongyeong base in September of last year, this marks the first delivery to the Incheon facility, which is responsible for LNG supply in the metropolitan area.
The LNG Canada project involves sourcing natural gas from the inland market in western Canada and transporting it to the west coast. The gas is moved through a dedicated 48-inch pipeline spanning 670 kilometers that crosses the Rocky Mountains. It is then liquefied at the Kitimat plant on the Pacific coast of North America before being exported to Asia.
KOGAS is participating in this project alongside global energy companies such as Shell, Petronas, PetroChina, and Mitsubishi. With an investment of 2 trillion won, KOGAS has secured a 5% stake, amounting to an annual share of 700,000 tons of LNG.
After overcoming various challenges, the project is now on track. KOGAS began participating in the LNG Canada project in 2010 with a joint feasibility study agreement, followed by a joint venture agreement in 2014. The final investment decision (FID) for the first phase was made in 2018, and construction commenced thereafter. Despite setbacks from the COVID-19 pandemic, global supply chain disruptions, and technical difficulties with the pipeline construction, commercial production began in June of last year.
She added, "We initially planned a 20% equity investment, but due to the lengthy duration of the project, we reduced our stake to 5%. It is fortunate that we managed to maintain at least 5% through all the challenges we faced, including extreme weather, snowstorms, and supply chain disruptions due to the pandemic."
The LNG Canada project is not just a long-term purchase agreement; it encompasses the entire LNG value chain, from sourcing raw materials to pipeline transportation, liquefaction, and sales. President Choi explained, "We directly own and have disposal rights over 700,000 tons of LNG. If domestic demand decreases, we can sell it overseas, and in times of crisis, we can bring it back to the domestic market."
This capability can play an immediate role in energy security. Since Canadian LNG utilizes the Pacific route to enter the country, it is relatively less affected by Middle Eastern instability or canal transit risks. KOGAS estimates that transportation costs via the Canadian route could be reduced by 20% to 50% compared to routes through the Middle East, U.S. LNG via the Panama Canal, or the Cape of Good Hope.
Since the start of commercial production at LNG Canada in June of last year, KOGAS has imported a total of five cargoes to date, with an additional five cargoes expected to arrive by the end of this year. President Choi stated, "We have decided to bring in the entire share of KOGAS by the end of the year, ensuring that the LNG Canada project can contribute to national energy security from the outset of its operations."
To gradually lower its dependence on Middle Eastern LNG, KOGAS is pursuing overseas resource development. The second phase of the LNG Canada project aims to add an annual capacity of 14 million tons. By utilizing existing infrastructure such as pipelines, sites, and port facilities from the first phase, cost reductions and improved project viability are expected. Having passed the government's preliminary feasibility study in May, the FID is scheduled for September this year, with production anticipated in the second half of 2031.
If the second phase proceeds as planned, KOGAS's share of LNG from LNG Canada will double from the current 700,000 tons to 1.4 million tons. With additional projects like the Prelude FLNG in Australia and developments in Mozambique, KOGAS's LNG share could grow to between 3.5 million and 4 million tons by the early 2030s.
President Choi emphasized, "While 700,000 tons may seem small in numbers, in times of energy crises, the ability to secure volume is crucial, more than money. Having a volume we can freely utilize means we can play a role in safeguarding national energy security."
She added, "We are reaping the fruits of overseas resource development projects that we have pursued over the past 20 years, enhancing our energy security capabilities. We will contribute to national energy security by increasing the self-development rate of natural gas resources."
* This article has been translated by AI.
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