After SK and GS and POSCO, Hanwha is also entering the liquefied natural gas (LNG) business. The move aims to target the rapidly growing global LNG power generation market as electricity demand rises with the expansion of artificial intelligence (AI) data centers. It also appears to reflect a goal of reducing costs by operating power plants with directly imported LNG and using it as a power source for the company's business sites.
According to business circles on the 31st, Hanwha Group's aerospace and defense affiliate Hanwha Aerospace recently established Hanwha Horizon USA in the United States to serve as a control tower for its LNG business. Hanwha Horizon USA will focus on LNG procurement and trading and plans to supply from the United States the fuel to be used at Hanwha Energy's Yeosu LNG power plant, which is set to begin commercial operation in 2029.
Corporations currently in the LNG business include SK Group, GS Group and POSCO Group. The most aggressive player is SK Innovation E&S, which is engaged in a wide range of businesses from overseas gas field development to direct LNG imports, LNG terminal operations and power plant operation.
Since 2012, SK Innovation E&S has participated in the development of the Barossa gas field, located offshore in northwestern Australia, securing a 37.5% equity stake and bringing 1.3 million tons of LNG into Korea starting this year. It also operates the Wirye combined heat and power plant and the Hanam combined heat and power plant, which use LNG as fuel, and supplies electricity from LNG power plants in Gwangyang, Paju and Yeoju.
SK Gas is operating Ulsan GPS, a combined-cycle power plant that can run on both LNG and LPG (liquefied petroleum gas).
GS Group conducts direct LNG imports and storage and power generation businesses. GS Energy directly imports LNG through its Singapore subsidiary and owns and manages the Boryung LNG terminal. GS GPS, Korea's first private power producer, operates an LNG combined-cycle power plant in Dangjin, South Chungcheong Province. GS Power operates combined heat and power plants in Anyang and Bucheon using directly imported LNG.
In the case of POSCO Group, POSCO International engages in LNG exploration, production, direct imports, terminal operations and power generation. POSCO International is directly producing natural gas from gas fields in Myanmar and Australia. It also operates the Gwangyang LNG terminal, an LNG storage facility, and the Incheon LNG combined-cycle power plant. Some of the directly imported natural gas is supplied as operational fuel and for self-generation at the Pohang and Gwangyang steelworks.
As multiple corporations expand their LNG businesses, domestic direct LNG imports are also increasing. According to the Korea Private LNG Association, the share of LNG directly imported by the private sector accounted for 26% of Korea's total LNG import volume last year. That was up 5 percentage points from a year earlier. The volume of directly imported LNG also rose 1.7% year over year to 12.44 million tons.
Corporations are rushing into the LNG business because projections continue to point to growth in the global LNG market. Global energy company Shell, in its recently released "2026 LNG Outlook," projected that global LNG demand will reach about 700 million tons per year by 2050. That is about 65% higher than last year's global LNG transaction volume.
LNG demand has been rising rapidly recently with the expansion of the AI market. Data centers for AI require large-scale, round-the-clock stable power. The International Energy Agency (IEA) projected that global data center electricity demand could rise from about 460 terawatt-hours (TWh) in 2022 to as much as 1,000 TWh this year.
In the short term, LNG is effectively the only power source that can supply electricity. Nuclear power can provide stable electricity over the long term, but construction takes a long time. As an alternative, small modular reactors (SMRs) will not see a first commercial unit begin operation until 2031 at the earliest, when a U.S. SMR developer comes online. Renewable energy such as solar and wind faces challenges in providing stable power.
A power generation industry official said, "If corporations have steady demand sources such as LNG power plants they operate themselves, they can forecast annual needs and sign supply contracts with large sellers on favorable terms," adding, "As the perception spreads that directly imported LNG is cheaper than that imported by Korea Gas Corporation (KOGAS), direct import volumes are increasing."
Another power generation industry official said, "Several countries, including those in Southeast Asia, are switching from coal power to LNG power due to recent environmental issues," adding, "As long as there is operational know-how in LNG power generation, there will be many business opportunities in the global market."