South Korea Expands LNG Infrastructure Despite 17% Demand Decline Forecast by 2036

South Korea is accelerating the construction of LNG import terminals and storage facilities in response to post-Ukraine energy security concerns, even as national climate targets project a 17% fall in natural gas demand by 2036 and the country already records some of the world's lowest LNG regasification utilisation rates. IEEFA analysis warns the infrastructure build creates high overinvestment risk and stranded asset exposure across both state-owned and private-sector developers.

South Korea currently has 153 MTPA of LNG regasification capacity across seven import terminals and 6.3 million tonnes of LNG storage capacity. Eleven new terminal projects aim to add 37 MTPA of regasification capacity by 2031, lifting national capacity to 190 MTPA. A further 3.4 million tonnes of new storage capacity has been proposed — a 53% increase on current levels. IEEFA estimates the total build-out will cost ₩11.3 trillion (US$8.7 billion). The government's own climate targets envision the share of LNG-fired power generation falling from 26.8% in 2018 to 9.3% by 2036, and natural gas demand declining from 45.4 MTPA in 2022 to 37.66 MTPA.

The scale of the planned build stands in contradiction to South Korea's net-zero trajectory. IEEFA's projections show unused regasification capacity rising from 107.9 MTPA in 2023 to 152.8 MTPA in 2036, compressing utilisation from 29.5% to 19.8%. The country's 2022 average regasification utilisation of 33% already compared poorly with the global average of 41% and Asia's 52.4%. Many proposed terminals are concentrated in close geographic proximity — particularly in Dangjin and Boryeong — competing for the same limited pool of end-users and raising efficiency concerns.

IEEFA recommends the South Korean government align infrastructure planning with NDC targets, strengthen public-private coordination to avoid duplicative investment and resist promoting blue hydrogen, bunkering and hydrogen blending as justifications for new LNG capacity — noting these applications have limited climate benefit. State-owned enterprises' overinvestment will ultimately fall on taxpayers, while private-sector debt accumulation poses financial stability risks. The report calls for a faster renewable energy transition as the structural solution to South Korea's exposure to volatile global LNG markets.

Key figure — 17% — projected decline in South Korea's natural gas demand from 45.4 MTPA in 2022 to 37.66 MTPA by 2036