Exclusive: Upping U.S. gas, oil imports in Korea’s cards under Trump pressure

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Exclusive: Upping U.S. gas, oil imports in Korea’s cards under Trump pressure

Published: 17 Nov. 2024, 18:00

PARK EUN-JEE
[email protected]

Audio report: written by reporters, read by AI

A liquefied natural gas (LNG) tanker is guided by tug boats at the Cheniere Sabine Pass, a top U.S. LNG export unit in Louisiana, on April 14, 2022. [REUTERS]

The Korean government plans to increase imports of oil and gas from the United States as top officials consider the expansion “one of the easiest options” to lessen its massive trade surplus with the world’s biggest economy.

Still, the move will likely be deployed as a bargaining chip in negotiations rather than an immediate execution as the Yoon Suk Yeol administration expects to face a multitude of challenges under the incoming Trump administration — from a hike in defense costs to the shred of subsidies for domestic EV, battery and chip manufacturers.

“Diversifying sources of oil and gas imports by reducing reliance on the Middle East is something that the Korean government has pursued so far because the strategy can protect Korea from different uncertainties,” a source with knowledge of the matter said.

“In this sense, the increased intake of energy sources from the U.S. is seriously discussed and favored by many policymakers,” said the source, who spoke on the condition of anonymity.

Trade Minister Cheong In-kyo is presently in discussions with the presidential office, according to multiple sources, although the Industry Ministry declined to confirm the reports.

The exploration came as Korea was reinstated to the U.S. currency monitoring list on Nov. 15 due mainly to a significant increase in its bilateral surplus and current account surplus.

Korea’s surplus with the U.S. significantly widened to $39.9 billion between January and September of this year, according to the Korea International Trade Association. On a full-year scale, this year’s figure will likely surpass last year’s $44.4 billion, which was an all-time high. The size almost doubled compared to 2021, when Korea’s surplus came at $22.7 billion.

Korea, Asia's third largest crude buyer, already has a record of initiating crude oil imports during U.S. President-elect Donald Trump's first term in 2017. Its imports of crude oil from the United States surpassed the $10 billion mark last year, which made United States the second-largest importing country after Saudi Arabia with a 13.5 percent share.

In terms of liquefied natural gas (LNG), the United States stood as the fourth-largest importing country last year with imports accounting for 11.6 percent.

Entering this year, Korea has further extended its purchase of U.S. crude oil.

“Korea's major refiners and petrochemical makers, including SK Innovation, Hanwha TotalEnergies and HD Hyundai Oilbank, collectively took 15.88 million barrels of U.S. crude — mostly light, sweet WTI Midland — in August, up 91.9 percent from a year earlier,” said a report S&P Global released in September.

Given the already increased imports of crude, another source predicted that a hike of LNG could take place.

According to local media outlets, state-run Korea Gas Corp. (Kogas) is considering replacing Oman and Qatar with the United States as a provider of LNG as a long-term contract with the two countries is set to last until this year.

Kogas struck a series of LNG contracts with the United States worth around 11 trillion won ($7.8 billion) between 2018 and 2019, during Trump's first term.

BY PARK EUN-JEE [[email protected]]