South Korea's Response to Qatar's LNG Supply Cut: Ensuring Year-Round Supply but Facing Pressure on Electricity Prices

South Korean officials stated on Wednesday that Qatar has terminated its long-term liquefied natural gas (LNG) supply contract with South Korea on grounds of force majeure. This move may intensify price volatility in South Korea's LNG market, though the overall impact on supply is expected to be limited.

During a routine briefing on resource supply amid the Middle East crisis, South Korea’s Vice Minister of Trade, Industry and Energy, Yang Ghi-wuk, mentioned that Qatar’s LNG has been excluded from this year’s supply plan. Even without this portion, South Korea’s LNG reserves are sufficient to ensure supply until the end of the year.

He noted that Qatar’s declaration of force majeure was in line with market expectations. South Korea had already diversified its gas supply sources through multiple channels to mitigate potential risks. As of now, no official notification has been received from Qatar.

Despite overall sufficient supply, the official pointed out that increased LNG price volatility will exert upward pressure on domestic electricity prices in South Korea. The Ministry of Trade, Industry and Energy is currently coordinating with other departments, including the Ministry of Environment, to address the situation. On Tuesday, the Ministry of Environment announced plans to reduce LNG consumption by increasing the proportion of coal and nuclear power.

Previously, multiple foreign media outlets reported that Qatar Energy declared force majeure on long-term LNG contracts with countries including South Korea, Italy, and Belgium, citing damage to facilities caused by missile attacks.

Yang Ghi-wuk also mentioned that South Korea is closely monitoring the supply of industrial and daily necessities such as engine oil, paint, and garbage bags to prevent unexpected disruptions across various sectors.