Ministry of Trade, Industry and Energy

The Ministry of Trade, Industry and Energy (MOTIE) of the Republic of Korea is making effort to reinforce liquefied natural gas (LNG) supply chain cooperation with other countries in response to volatility risks in the global energy market with aim to stabilize the domestic natural gas supply.

First, through the Korea-Singapore LNG memorandum of understanding (MOU) signed between MOTIE and Singapore’s Ministry of Trade and Industry (MTI) on the margins of the Korea-Singapore summit (October 8), the two countries plan to secure supply flexibility via LNG swaps capitalizing on their discrepant summer and winter supply patterns and raise price negotiability through joint purchases. As Korea is the world’s third largest LNG importer and Singapore is a global trading hub with its world-leading infrastructure and professional talent, the two countries’ bilateral cooperation is anticipated to create significant synergy.

Second, Korea is pushing LNG cooperation with Japan as well. On the occasion of the LNG Producer-Consumer Conference 2024 (PCC) held on October 6 in Hiroshima, MOTIE and Japan’s Ministry of Economy, Trade and Industry (METI) agreed to kick LNG cooperation into high gear.

Both countries’ governments, Korea Gas Corporation (KOGAS), and JERA will work together to monitor the global supply situation, strengthen information exchanges, make joint purchases, and roll out an LNG swap pilot project. Based on these endeavors, they intend to forge agreements going forward to bolster intergovernmental and corporate cooperation so that the two countries can secure stable LNG supplies during global supply chain uncertainties.

As of 2023, Korea and Japan are the world’s third and second largest LNG importers, respectively. Based on geographic proximity, the two countries’ collaboration is meaningful in that they can enhance LNG supply flexibility and supply chain resilience even in times of global energy crises.

Third, another outcome of the LNG PCC 2024 was that an Early Alert Mechanism (EAM) pilot project should be launched with the participation of major LNG producers like Australia, Canada, and the U.S. and importers like the EU, Japan, and Korea.

The EAM is a natural gas supply chain crisis sharing system for swift information spreading and joint response against accidents that may potentially damage natural gas field facilities and disrupt the natural gas supply chain. Not only that, but each country’s LNG storage volume, LNG terminal usage rate, weather, and other basic industrial information are to be shared within permissible range of disclosure. The Korean government plans to take part in the EAM on a regular basis to prepare for potential risks by monitoring and analyzing provided information, while also forecasting accidents and identifying market anxiety factors in advance to help stabilize the domestic natural gas supply.