South Korean state-owned Korea Gas Corp.'s LNG imports rose 3.8% to 33.064 million mt in 2017 from 31.846 million mt the year before, a company official said Thursday.
This marks the second consecutive annual increase in the country's LNG imports after two years of declines, and comes as the country's domestic LNG demand is expected to increase on the back of President Moon Jae-In's push to reduce reliance on coal and nuclear for power generation.
The official did not disclose how much Kogas imported in the fourth quarter. But given its imports over January-September totaled 24.428 million mt, up 11.7% year on year, it imported 8.636 million mt in Q4, down 13.4% from 9.975 million mt in Q4 2016, according to S&P Global Platts calculations.
Most of the company's LNG imports in 2017 came under 15 term contracts, which totaled 35.2 million mt/year, up from 33.3 million-34.3 million mt the year before.
Kogas has term contracts for 9.02 million mt/year from Qatar, 4 million mt/year from Malaysia, 4 million mt/year from Oman, 3.5 million mt/year from Australia, 2 million mt/year from Yemen, 1.7 million mt/year from Indonesia, 1.5 million mt/year from Russia's Sakhalin and 1 million mt/year from Brunei, among others, the official said.
The company also started to import 2.8 million mt/year of LNG from the Sabine Pass terminal in Louisiana in June 2017 under a 20-year contract.
Its 30-year contract with Indonesia's Badak project, under which Kogas has imported 1 million mt/year since 1998 expired, late last year. Two other long-term contracts will expire in 2018 -- 2 million mt/year from Malaysia's MLNG II project that began in 1995 and 1 million mt/year from Brunei's BLNG that began in 1997.
This equates to a total loss of 4 million/mt, more than 10% of Kogas' term contract volume.
Seven more long-term contracts, worth 17.28 million mt/year, are scheduled to expire before 2030, including 7 million mt/year from Qatar's Rasgas, 4 million mt/year from Oman's OLNG and 2 million mt/year from Yemen's YLNG.
Kogas said it will seek to diversify its LNG supply sources to include Russia and the US to ease its dependence on the Middle East and Southeast Asia. Around 90% of its imports are currently sourced from five suppliers: Qatar, Australia, Oman, Malaysia and Indonesia.
"Kogas has started preparations for new term contracts and seeks to sign new deals at least five years before existing contracts expire," the company official said.
The rise in LNG imports last year came as Kogas' sales of the fuel have been on the decrease.
The state utility, which has a monopoly on domestic natural gas sales, sold 32.163 million mt of LNG in 2017, down 1.9% year on year.
Of the total, LNG sales to retail gas companies for households and businesses rose 5.8% year on year to 18.39 million mt, while LNG sales to power generators fell 10.5% to 13.773 million mt.
"The decline in LNG sales to power generators was attributable to the start of production at a newly coal-fired power plant and restart of several nuclear reactors shut for a major earthquake," the Kogas official said.
Despite the 1.9% decline in LNG sales in 2017, Kogas' revenue rose 5% year on year to Won 22.17 trillion ($20.49 billion) in the year, driven by higher retail prices, the official said.
The utility posted a net loss of Won 1.92 trillion for 2017, expanding from a net loss of Won 612.5 billion the year before. Its operating profit rose 3.6% to Won 1.03 trillion over the same period.
The expanded net loss was attributable to losses in exploration and development projects overseas, such as in Iraq, Australia and Indonesia. Kogas is involved in 25 overseas projects in 13 countries, including 10 under development and production and four at the exploration stage.
Kogas saw its debt decrease to Won 29 trillion at end 2017 from Won 30.57 trillion a year earlier. But its debt-to-equity ratio rose to 356.2% from 322.7% over the same period.
The state utility's LNG imports and sales are likely to keep rising in 2018 as Moon, who took office last May, has vowed to increase power generation by LNG to reduce the country's heavy reliance on coal and nuclear.
Under the country's long-term Basic Blueprint for Power Supply released last December, the percentage of electricity production from LNG would climb to 18.8% in 2030 from 16.9% in 2017.
The share of coal would fall to 36.1% in 2030 from 45.3% in 2017, of nuclear would fall to 23.9% from 30.3%, and of renewables would rise to 20% in 2030 from 6.7% in 2017.