At a briefing held that day at the Government Complex Sejong, Yang Gi-uk, Director General for Industrial Security and Resources at MOTIE, said, “Last evening (April 1) the Australian Government stated that it would initiate procedures to restrict LNG exports.”

Last year, Korea relied on Australia for 31.4% of its total LNG imports, the highest share among its suppliers.

Australia cited a shortage of LNG for domestic use as the reason for the export restrictions. Yang said, “Even if Australia produces a lot of gas, a phenomenon occurs where it sells it abroad because overseas gas prices are good,” adding, “Because LNG for domestic use is being sold overseas, the Australian Government judged that it needs to restrict that part.”

The Australian Government said LNG produced in the east, totaling 220,000 tons, would be subject to review for possible export restrictions. No export restriction measure has been triggered immediately. It plans to make a final decision in May after discussions with industry.

MOTIE explained that even if Australia actually imposes LNG export restrictions, the impact on Korea would not be significant. Yang said that, assuming a worst-case scenario, the volume that could affect domestic supply and demand would be up to 40,000 tons, equivalent to 0.5 days of domestic consumption. Yang said, “The Australian Government also stated that there would be no impact on long-term contracts.”

Nevertheless, the implications of Australia’s move are significant. First, factors pushing up LNG prices have increased. With Qatar—responsible for about 20% of global LNG production—already having declared force majeure over long-term supply contracts to Korea, further price increases are unavoidable if Australia, another LNG powerhouse, gradually begins “closing the export door” as well.

The “LNG Japan-Korea Marker,” an LNG price benchmark, recorded 19.83 dollars per 1MMBtu (a fuel unit) on April 1. It was $10.70 on Feb. 27, just before the outbreak of war.

In addition, if countries “lock” their export gates on the grounds of energy security, it could deal a critical blow to Korea, which is highly dependent on resource imports. Australia’s ABC reported that this was “virtually the first energy policy the Australian Government has taken since the Middle East situation.”

According to Reuters and other sources, Australia’s Minister for Resources Madeleine King said, “a clear signal that the government can take any action when risks arise in Australia’s supply chain.”

Professor Yoo Seung-hoon of the Department of Future Energy Convergence at Seoul National University of Science and Technology said, “Korea’s dependence on energy imports is at around 94%, the highest in the world,” adding, “We need to think about how to safeguard energy security.”

Source: BusinessKorea