Busan Port Authority (BPA) has formed a joint venture with the government-backed LNG procurement agency Korea Gas Corporation (KOGAS), to supply LNG bunkers in Busan Port, with the long-term expectation that demand from container shipping will substantially increase.
BPA is among five South Korean organisations that signed JV agreements with KOGAS on 14 July 2020, with the JVs intended to be formed by October. The other organisations are steel group POSCO International, oil refiner S-Oil Corporation, and shipping companies Hyundai Glovis and Daewoo Logistics Corporation.
Since 2019, KOGAS has encouraged JV’s involving strategic partners, with the vision of combining the parties’ expertise in LNG procurement, port operations, shipping, refining and logistics, to secure stable LNG demand and strengthen mid-to long-term competitiveness.
The BPA-KOGAS JV comes two years after both parties conducted a feasibility study on the LNG bunkering business. The study involved an in-depth examination of the LNG bunkering system and business methods for Busan Port, including a floating LNG bunkering terminal.
Busan is South Korea’s busiest container port and therefore accounts for a substantial proportion of bunker sales in the country.
Currently, only a handful of the world’s container ship fleet are LNG-fuelled, but KOGAS is playing a long game, predicting sales of LNG bunkers will reach 1.36 million tonnes and KRW1 trillion (US$834 million) by 2030. LNG-fuelled container ships in the global fleet include Containerships Polar and Containerships Nord.
KOGAS plans to secure two bunkering tankers in the Sea of Japan and the South Sea (an informal term for the intersection of the Yellow Sea and the Sea of Japan), one bunkering ship in the Yellow Sea, and vessel to transport LNG bunkers from terminals in Dangjin.