South Korean energy and shipbuilding companies are gearing up for a swift advance into the US liquefied natural gas (LNG) market expected to take a new leap under a second Donald Trump administration vowing to lift regulations in the country’s LNG industry.
According to sources in the Korean energy industry on Wednesday, POSCO International Corp. is considering acquiring an LNG terminal in the US, in which LNG production and exports are expected to hit new record highs once Trump returns to the Oval Office next year.
During his presidential campaigns, the US President-elect pledged to lift restrictions on LNG production and export imposed under the Joe Biden government. He also promised state aids for the construction of new LNG production facilities in the country.
The US is now the world’s largest LNG producing and exporting country thanks to the discovery of massive shale gas reserves in the nation.
The country’s LNG exports are forecast to grow to over 100 million tons in 2025 from over 90 million tons in 2023, and under the new Trump administration, its LNG exports are expected to grow bigger.
In October, the general trading and energy exploration unit of Korea’s steel giant POSCO Holdings Inc. unveiled a plan to advance into the booming North American natural gas market.
At that time, it was said to be in the early stages of talks to acquire a local LNG terminal business in the US, and the company official hinted that it would take some time before the Korean company takes over the US LNG terminal business.
In the long run, POSCO International also plans to foray into other parts of the US natural gas value chain, including upstream covering LNG exploration and production and midstream handling LNG transportation, storage and trade.
The LNG terminal business has lower entry barriers than other natural gas businesses.
LNG SHIP ORDERS WILL JUMP
Another Korean conglomerate Hanwha Group has already tapped the US LNG market after acquiring a 15% stake in NextDecade, LNG LLC in Houston, TX, which owns and operates LNG terminals.
Using its close ties with the US LNG terminal operator, the Korean company will likely seek to win more LNG ship orders expected to surge in line with growing LNG exports.
Hanwha Group has Hanwha Ocean Co., one of Korea’s big three shipbuilders. Last week, Hanwha Ocean won a 713.5 billion won ($511 million) order to build two LNG carriers.
Its cross-town bigger rivals HD Hyundai Heavy Industries Co. and Samsung Heavy Industries Co. are also gearing up for a new heyday of the global LNG vessel market by beefing up investments in up-to-date LNG vessel technologies to cement their leadership in the LNG shipbuilding market.
The Korean LNG shipbuilding market, which has been enjoying a super cycle, is expected to make a quantum jump driven by the thriving US LNG market.
Considering current LNG ship order backlogs and future projects, more than 100 new LNG ship orders are expected to be made in the next two to three years, industry observers said.
Source: The Korea Economic Daily
