South Korea's state-run Korea Gas Corp, the world's largest buyer of LNG, said Thursday it imported 34.97 million mt of LNG in 2012, up 2.9% from a year earlier.

The state utility said it plans to import 37.90 million mt of LNG in 2013, up 8.4% year on year, to meet growing power generation demand.

South Korea's LNG imports have grown rapidly since 23.80 million mt was received in 2009, but Kogas ruled out future supply shortages by saying it had new LNG import deals in place, including plans to buy 7.3 million mt/year from Australia beginning 2015 and 3.5 million mt/year of US shale from 2017.

Kogas imported 10.5 million mt of LNG from Qatar in 2012, 4 million mt from Oman, 4 million mt from Malaysia, 3 million mt from Indonesia, 2 million mt from Yemen and 1.3 million mt from Egypt, among other sources.

The state utility, which has a monopoly on natural gas sales in the country, sold a total of 36.55 million mt of LNG in 2012, up 8.9% from 2011. Sales to power generators rose 10.9% year on year to comprise 16.99 million mt of the total, while sales to retail gas companies for household and industry rose 7.1% to 19.56 million mt. The company plans to sell 37.86 million mt of LNG in 2013, up 3.6% year on year.

Kogas last week posted a 2012 net profit of Won 362 billion ($326.4 million), more than double the Won 174.7 billion recorded in 2011.

Full-year operating profit rose 23.8% to Won 1.27 trillion, while full-year revenue rose 23.2% to Won 35.03 trillion. The state utility attributed the strong earnings to higher gas prices and stronger power generation demand.

A shutdown of nuclear reactors also boosted LNG consumption for electricity generation. South Korea gives first priority to coal-fired plants and nuclear reactors in generating electricity under a policy to reduce power generating costs. As power demand grows, it increases operation of plants fired by more expensive gas and oil.

EARNINGS FORECAST TO RISE

South Korea's demand for LNG, used intensively for heating and power generation in the country, has been on the rise due to hotter than usual summers and a colder than usual winters in recent years.

Kogas forecast its earnings to further improve this year on higher gas prices. The government increased gas rates by an average 4.4% from February 22, the first hike since late June 2012, when they rose an average 4.9%.

The energy ministry said the price hike would help Kogas reduce its losses from selling below cost. The government had long frozen gas prices as it struggled to curb fast-rising inflation, resulting in losses for Kogas.

The ministry acknowledged that the prolonged gas price freeze had contributed to an increase in Kogas' payments receivable and debt ratio amid rising LNG import costs. The amount Kogas booked as payments receivable, or losses caused by pricing below cost, had snowballed to Won 5.5 trillion by the end of 2012, up from Won 4.4 trillion a year earlier, the utility said.