South Korean businesses have voiced concerns over possible restriction Australia could place on LNG exports in order to secure domestic gas supply.
The Federation of Korean Industries (FKI) urged Australia to reconsider its decision during the Australia-Korea Business Council (AKBC) meeting.
FKI noted that Australia’s LNG export restrictions could impact South Korea, the third largest importer of Australian LNG volumes, as the country’s demand is expected to rise significantly in line with the government’s ‘eco-friendly’ energy policy.
South Korea, the second largest LNG importer in the world, will be switching away from the nuclear power generation to alternative sources.
Earlier this year, Australian government unveiled its Australian Domestic Gas Security Mechanism (ADGSM) under which it can intervene to ensure there is a sufficient supply of natural gas to meet the forecast needs of Australian consumers. It will do this by requiring LNG projects which are drawing gas from the domestic market to limit exports or find offsetting sources of new gas.
A number of east-coast LNG exporters have made deals to increase gas supply to the domestic markets as the pressure from the government mounted.
In September, the government received the guarantee from the three liquefied natural gas exporters, Origin, Santos and Shell they will cover the expected gas demand shortfall in 2018.