South Korea will cut retail natural gas prices for households and industry by 9% on average from January 1 to reflect the lower LNG import bill as a result of sliding oil prices, the Ministry of Trade, Industry and Energy said Tuesday.
“The government will further lower city gas rates if LNG imports costs continue falling,” the ministry said in a statement.
The 9% cut will lower average retail gas prices to Won 15.69 ($0.01)/megajoule, from Won 17.24/MJ, the ministry said.
South Korea cut city gas rates several times this year due to falling LNG imports costs — reducing prices by 5.9% in January, 10% in March and 10.3% in May but increasing prices 4.4% in September.
LNG demand has fallen despite the price cuts. Kogas, which has a monopoly on domestic natural gas sales, sold 27.97 million mt in January-November, down 8.8% year on year.
Kogas sold 35.17 million mt of LNG last year, down 9.1% from 2013, the first annual decline in five years.
The trade ministry said Monday it expects South Korea’s LNG demand to fall 5% over the next 15 years due to a steep decline in consumption for power production that offsets mild growth by households and industry.
It forecast LNG demand to fall to 33.96 million mt in 2022 and 34.65 million mt in 2029, compared with 2014 consumption of 36.49 million mt.