The lawmaker proposed to revise the urban gas business act…it is intended to expand market competition and establish Northeast Asian LNG hub.
A member of the National Assembly proposed a bill for revising the urban gas business act that allows expansion of direct import of natural gas by private companies and resale in foreign countries to remove inefficiency caused by monopolized import of such gas.
Rep. Kim Han-pyo of the ruling Saenuri Party proposed on April 9 the ‘partial revision of urban gas business act’, allowing expansion of direct import of natural gas and overseas resale by private companies.
The proposed revision bill rules Korea Gas Corporation (KOGAS), which is monopolizing import of natural gas, to compete with private companies. Defining the ‘natural gas trading business’ by adding Item 9-2 and Item 9-3 of Article No. 2 of the act, the revision bill stipulates to allow import of natural for the purpose of exporting to foreign countries using storage facilities installed in bonded areas based on Article No. 154 of the customs law. While it prohibits resale of imported natural gas to the third party in Korea, it allows natural gas importers to sell evaporative gas to wholesalers or self-consuming direct importers.
The revision bill seems to intend to provide an institutional foundation for LNG trading business while flexibly coping with changes in international energy market by permitting overseas resale of imported natural gas. It is presumed that the revision bill corresponds with the government’s plan of increasing ratio of imported shale gas to 20% of LNG in Korea by 2020 and setting up the ‘Northeast Asian LNG hub’ in Korea announced in September 2012 as part of its ‘comprehensive strategy for proactive import of shale gas’.
And the revision bill also eased limitation on natural gas deal of direct importers by allowing them to resell imported natural gas in foreign countries whereas the act has been permitting transactions between direct importers only. But the volume of resale is limited to the amount defined by the Presidential decree.
As for the reason of proposing the revision bill, Rep. Kim Han-pyo explained the necessity of improving the institution to allow private companies to explore new business chances by flexibly coping with changes in environment of international energy market because shale gas development is recently increasing and LNG trading market in Northeast Asia is expanding.
The lawmaker also said that the revision is designed to help Korea position as an LNG trading hub in Northeast Asia by setting up institutional foundation for natural gas trading business, while easing limitation on natural gas deal of self-consuming direct importers.
Source: e2news
