Dr Brian Fisher, executive director of ABARE, launched the research report, LNG in Korea: Opportunities for Growth, last week saying natural gas is projected to remain one of the fastest growing fuels in Korea, averaging 5% growth a year over the period 2001-15 to reach 33 million tonnes.

'A critical issue for Korea is that natural gas supply plans have not kept pace with projected demand, and a significant gap between demand and supply could develop over the next decade', Dr Fisher said. 'While Korea has in place medium and long term contracts to import 19 million tonnes of LNG a year, this will be insufficient to cover its gas requirements over the medium to longer term'.

Taking into account the expiry of some existing LNG contracts, supply in 2010 could be 8 million tonnes lower than the projected natural gas demand. By 2015, this shortfall could be around 20 million tonnes.

'LNG will continue to meet the majority of Korea's projected demand although, over the longer term, pipeline natural gas imports from the Russian Federation could provide a complementary source of gas supply. The introduction of pipeline natural gas will depend significantly on its competitiveness with imported LNG, although noneconomic factors, including energy security and geopolitical concerns, could play a role in the decision making process', Fisher said.

'To date, Australia has had a limited role in supplying LNG to Korea, although Korea recently signed a contract with North West Shelf Australia LNG for 0.5 million tonnes a year for seven years from late 2003', Dr Fisher said. 'Long term commitments from a buyer such as Korea could underpin the development of a number of Australia's proposed LNG export projects'.

Australian producers can expect tough competition for the lucrative long-term contracts from producing giants such as Qatar, Russia and Indonesia as the race for a share of the booming global energy demand heats up.