The shale gas boom that began in the United States will benefit Korea Gas Corporation (KOGAS), the world’s largest LNG importer, according to a panelist at Offshore Korea Technical Conference in Busan, South Korea, today.
Si-Ho Ryu, senior researcher at KOGAS said low price and reliability of the US shale gas and flexibility when choosing destinations are very favourable conditions for importers.
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Ryu said: “The US shale gas price is relatively low compared to gas prices from other countries. The current Henry Hub national gas spot price is currently at USD3 level only per million btu. Given this, importing LNG from the United States is more cost-effective even (if) it takes a long way around during the delivery procedure from United States to Korea.”
He added that importing LNG from the United States is preferred because the country is politically stable. It is much more reliable to import LNG from United States instead of relying on countries in the Middle East.
“When importing LNG from other countries, KOGAS cannot change the destination due to destination clause in the contract, which prohibits the importer from changing destination. Under the destination clause, shipped LNG can be unloaded only at appointed destination. However, when importing LNG from the United States, KOGAS is able to change the destination.”
He concluded that the existing global LNG market has been very tight because of the strong demands compared to the lower supply. However, thanks to the US shale gas boom, the market will have more flexibility from 2016.
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