The Korean government states that Qatar's contract termination could lead to increased volatility in liquefied natural gas prices.

Korean officials said Wednesday that after Qatar announced that it would terminate its long-term liquefied natural gas (LNG) supply contract with South Korea due to force majeure, South Korea could face greater LNG price volatility, though the impact on supply may be limited.

Yang Ghi-wuk, deputy minister of industrial trade and resources of South Korea, said at a daily briefing on resource supply during the Middle East crisis: “We have excluded LNG shipments from Qatar from the LNG supply volumes calculated for this year,” adding that even without including shipments from Qatar, South Korea still has enough LNG supply to last through the end of this year.

He added that because Qatar’s announcement of force majeure was expected, the government has been working to ensure gas supply through other channels, although it has not yet received official confirmation from the Middle Eastern country.

The official noted that even though supply is sufficient, LNG price volatility could intensify, putting upward pressure on electricity prices in South Korea. He emphasized that the Ministry of Trade, Industry and Energy of South Korea is working closely with the Ministry of Environment and other relevant departments to address the issue together. South Korea’s Ministry of Environment announced on Tuesday a plan aimed at reducing LNG consumption by increasing coal and nuclear power generation.

Hours before Yang Ghi-wuk made the remarks, several foreign media outlets, including Al Jazeera, reported that QatarEnergy announced that due to damage to its facilities from a missile attack last week, its long-term LNG supply contracts with countries including South Korea, Italy, and Belgium were terminated due to force majeure.

Yang Ghi-wuk said the government is also closely monitoring supply issues for other industrial products and daily necessities, such as engine oil, paint, and garbage bags, and pointed out that supply disruptions unexpected by some industries could occur.

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Editor: Yu Jian SF069