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

SK Gas

29/09/2017 08:47

* 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.  urn:newsml:reuters.com:*:nL4N1LM195 
    "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 
 036460.KS , 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. 
 LNG/KRTRD  
    "(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) 
 ((jane.chung@thomsonreuters.com; +82 2 3704 5667; Reuters 
Messaging: jane.chung.thomsonreuters.com@reuters.net)) 
 
Keywords: SOUTHKOREA LNG/POWER