CAPE TOWN: South Korea imported 3.05 million mt of LNG in March, down 25.9% year on year and down 1.2% from February, customs data showed Wednesday, April 15. The lower imports were a direct result of high inventories caused by weak downstream demand.
It was the third straight year-on-year drop in South Korea’s monthly LNG import data. The country imported 10.18 million mt in the first quarter, down 20.2% from Q1 2014.
State-owned Kogas earlier reported a 7.1% year-on-year drop in January LNG sales, with February LNG sales falling 9.1% year on year to 3.37 million mt.
The company’s March sales data is not yet available.
Kogas has been trying to deal with its high inventories by carefully managing deliveries at its terminal operations.
Sources said the company has been asking other long-term buyers in North Asia to receive some of Kogas’ summer term cargoes in exchange for supplying winter cargoes to Kogas later.
Kogas’ current situation is already showing signs of being a repeat of last year, when LNG imports made year-on-year drops from March to November and resulted in Kogas swapping cargoes with other buyers and asking for deferrals from their long-term suppliers.
However, while some Japanese buyers were able to help Kogas by swapping cargoes last year, this year would be more difficult for Kogas to find willing swap partners, as Japanese buyers were also facing weaker demand and rising inventory levels, sources said.
The average price that Kogas paid for March imports was well above the spot JKM price for the month.
The March JKM was $7.436/MMBtu, with the average import cost from all suppliers above $10/MMBtu, with the exception of Indonesia, with whom Kogas has signed a long-term low-slope oil-indexed contract.
This suggests that South Korean buyers were largely out of the spot market for March.
Kogas’ imports from Indonesia, Qatar, Yemen and Oman were down 52.6%, 42.6%, 40% and 0.6%, respectively, indicating that it was successful in deferring some cargoes from long-term suppliers.
Despite the large year-on-year fall in volumes from Qatar, the country remains South Korea’s largest LNG supplier, sending 1.2 million mt in March.
