2024-04-22-IEA-韩国天然气供应安全（英）_70页_7mb

Natural Gas Supply Security in Korea: Summary of Insights from the 2022 Gas Supply Shock

1. Introduction and Context

The 2022 gas supply shock, triggered by the Russian invasion of Ukraine, highlighted vulnerabilities in global energy markets, including Europe's heavy reliance on Russian natural gas and its impact on the wider liquefied natural gas (LNG) market. Korea, as a major global importer of LNG, assesses these global dynamics in shaping its domestic strategies.

2. 2022 Gas Supply Shock and its Effects

• European Market Response: The reduction of Russian pipeline gas exports by ~50% (83bcm) in 2022 forced Europe to increase LNG imports by ~60% (nearly 170bcm), disrupting global balance and hiking prices (e.g., TTF hub prices surged to $60/mmBtu). Despite this
• LNG Market Tightening: Asia-Europe price correlations shifted, with Europe imposing a premium on LNG due to high demand, which negatively impacted other regions.
• Policy Initiatives: Post-invasion actions included REPowerEU, demand reduction measures (EU-wide), increased storage fill rates, and joint purchasing mechanisms to diversify supply.

3. Korean Natural Gas Market Overview

• Market Structure: Dominated by KOGAS (wholesale) and city gas companies (retail). direct imports are growing but face challenges from high prices and volatile global markets.
• Supply Vulnerabilities: Ranked 3rd globally in LNG imports (12% of global imports in 2022), with major suppliers including Australia and Qatar. Spot prices crashed in 2022 but recovered quickly due to market interventions.
• Demand Trends: Natural gas demand in OECD Europe is expected to decline by ~6% annually until 2026 due to energy efficiency, policy shifts, and structural changes (e.g., growth of renewables and hydrogen).

4. Policy Implications and Recommendations

• Supply Diversification: Strengthen options for co-operation with neighboring countries (e.g., joint purchasing with Japan or China) to mitigate geopolitical risks.
• Market Flexibility: Explore mid-term contracts and storage options to reduce exposure to global price volatility. Enhance transparency in spot price indices.
• Demand- and Supply-Side Flexibility: Invest in alternatives to gas (e.g., hydrogen, renewable energy) and improve energy efficiency through industrial electrification programs, building retrofits, and consumer incentives.
• Liberalization: Decentralise gas import strategies (similar to the EU) to foster competition, while ensuring compliance to maintain security.
• Hydrogen Economy Integration: Accelerate the adoption of hydrogen-ready infrastructure and diversify gas supply with low-carbon alternatives.

5. Energy System Integration and Global Co-operation

• Global Linkages: Korea must monitor global supply trends (e.g., US, Qatar, and Africa as key exporters) due to its dependence on LNG.
• Strategic Need: Actions must align with decarbonisation goals while maintaining energy affordability and security. International co-operation is vital for navigating a volatile global market.

6. Conclusion and Priorities

Korea's security of supply depends on diversification, market flexibility, and co-operation. The transition towards renewable energy and hydrogen reduces demand but face technical, regulatory, and logistical hurdles.

Key Recommendations:

• Explore portfolio diversification to ease dependency on single suppliers.
• Enhance intra-day demand flexibility to smooth short-term fluctuations.
• Increase floating storage and regasification units (FSRUs) infrastructure to adapt to dynamic markets.
• Foster international dialogue and joint purchasing mechanisms with neighbouring Asia-Pacific countries.

This report underscores that enhanced domestic market flexibility and international co-operation are critical to mitigating exposure to global natural gas price volatility and supply interruptions.