South Korea will promote bunkering of liquefied natural gas (LNG) for fueling vessels to meet environment goals at home and abroad.

According to the Ministry of Trade, Industry and Energy on Tuesday, the Cabinet approved a revised urban gas business act that includes newly creating category for vessel-use LNG business. The revision that goes into effect from Wednesday has been drawn out to boost the country’s LNG bunkering – or fuel supply – market. Vessel-use natural gas business involves supplying natural gas to vessels – from truck to ship, ship to ship, and tank to ship.

There were limits under existing gas market system in boosting LNG bunkering market due to high cost of natural gas. Korea Gas Corporation has been the country’s sole supplier of natural gas for vessels as no other private players were engaged in the business due to high cost.

The latest amendment in urban gas business act is aimed at boosting early phase vessel-use natural gas market. The revision newly defined regulation for vessel-use natural gas business, separating from existing gas market.

According to the revised act, the government will allow private players to register business if they meet minimum requirement –either have a storage tank, vehicle-linked tank, or natural gas supplying ship, and 100 million won ($83,763) or more in capital – lowering barrier for market entry.

A vessel-use natural gas supplier will only need to give notice when importing natural gas from overseas, and the price will also be determined by the market. In existing gas market, an importer had to receive government approval when bringing in natural gas.

Total import volume and gas price also needed to be approved by the government or regional entity.

An unnamed official from the trade ministry said that the government restricted volume based on appropriate supply and demand. Business entities will now be able to adjust volume in vessel-use natural gas market according to demand. Price will also be determined by the market instead of the government, allowing more competitiveness, the official added.

The revision also allows vessel-use natural gas suppliers to dispose vessel-use natural gas – but not to a third party other than those treating vessel-use natural gas – to prevent industry confusion.

Disposing evaporative gas inevitably in the process of managing gas supply facilities or being unable to operate normal business due to shut down or insolvency will be allowed to a third party.

Meanwhile, demand for vessel-use LNG has been growing after enhanced vessel exhaust gas regulation by International Maritime Organization (IMO).

This year, IMO lowered the limit for sulphur in fuel oil used on vessels from 3.5 percent to 0.5 percent. As result, the country’s LNG bunkering demand is expected to rise to 1.23-1.36 million tons in 2030 to 3.37-3.43 million tons in 2040.

By Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]