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S Korea Begins Commercial LNG Production
November 24, 2004
Korea began commercial production of liquefied natural gas, or LNG, at its first offshore gas field. "This marks a successful outcome of 40 years of attempts to produce gas on our own," announced the state-run Korea National Oil Corp. on November 5.
The field is located in the East Sea, some 58 kilometers away from the southeastern city of Ulsan. It is estimated to hold about 5 million tons of LNG, worth about $1.2 billion won. It holds enough LNG to meet 2.2 percent of Korea's annual demand. According to Korea Oil, 400,000 tons is enough to power about 340,000 household units. The government established a production plant in 2002, four years after detecting the potential for natural gases in the East Sea. It produced the first LNG in July, in a test operation.
"More than anything, the field proves that Korea is equipped with the technology to detect and produce gas on its own. So this is a real a breakthrough, not to mention that it can help increase supply amid the growing demand," said Kim Hyun-tae, a researcher at state-owned Korea Institute of Geosciences and Mineral Resources.
Demand for LNG is predicted to rise 5 percent a year over the next decade. Korea, the world's 11th-largest economy, is the fourth-largest oil importer and the second-biggest buyer of LNG. The Ministry of Commerce, Industry and Energy also is drawing up a blueprint for a major overhaul to heighten the nation's energy-efficiency.
An opportunity to further research the development of natural gases is yet another advantage that Korea can hope to obtain with the gas field, said Kim. Based on such studies, he predicted that the country should be able to have more leverage in overseas joint ventures for oil and gas.
The LNG field is some 58 kilometers away from the southeastern city of Ulsan. Korea Oil plans to provide 40,000 tons annually until 2018 to Korea Gas Corp., which will distribute it to consumers in Ulsan.