Redesigning LNG Supply Chain Strategies for the AI Era: Expanding Private Stockpiling and Boosting Storage Capacity to 8.87 Million Tons

Government Finalizes 16th Long-term Natural Gas Supply and Demand Plan
City Gas Demand Rising While Power Generation Demand Declines
AI-based Supply and Demand Management System Introduced; Supply Sources Diversified

An LNG carrier carrying volumes from the LNG Canada project in which Korea Gas Corporation participated docked at the Incheon LNG terminal in June to prepare for unloading operations. Korea Gas Corporation.

The government has announced a comprehensive overhaul of its natural gas stockpiling system and supply chain to respond to the expansion of artificial intelligence (AI) data centers, semiconductor clusters, and geopolitical risks originating from the Middle East. The plan includes expanding private sector participation in the traditionally public-centered stockpiling system, introducing an AI-based supply and demand management system, and increasing LNG storage capacity to up to 8.87 million tons by 2038, all as part of broader efforts to strengthen energy security.

On July 27, the Ministry of Trade, Industry and Energy finalized and published the “16th Long-term Natural Gas Supply and Demand Plan (2026-2038).” The plan serves as a national mid- to long-term roadmap, detailing natural gas demand projections and strategies for resource security, imports and supply management, and supply infrastructure expansion over the coming 13 years. The core direction includes managing demand-side operations to prepare for supply and demand volatility, reinforcing resource security, and building a stable gas supply structure through infrastructure expansion.

The government diagnosed that volatility in the international LNG market is increasing. Ongoing concerns about the prolonged Russia-Ukraine war and instability in the Middle East—such as the potential closure of the Strait of Hormuz—have heightened uncertainties in the global LNG supply chain. At the same time, domestic electricity demand is expected to rise due to the construction of AI data centers and semiconductor clusters. Additionally, with the expansion of direct imports and the introduction of individualized pricing, the domestic gas market is becoming more diversified, which the government believes will require more sophisticated supply management.

According to supply projections, total base demand for natural gas is forecast to decrease by an average of 0.94% annually, falling from 45.91 million tons in 2026 to 41.00 million tons in 2038. In contrast, city gas demand is expected to increase by an average of 1.5% annually, rising from 23.56 million tons to 28.16 million tons during the same period. Growth in industrial city gas demand—anticipated to average 2.37% per year—will drive this increase. Meanwhile, demand for power generation is projected to decrease by an average of 4.51% annually, reflecting the power mix in the 11th Basic Plan for Electricity Supply and Demand, dropping from 22.35 million tons to 12.84 million tons.

The government has also decided to separately operate “management demand” to account for volatility in electricity demand. As a result, total demand is expected to remain relatively unchanged, from 47.62 million tons in 2026 to 47.67 million tons in 2038. This reflects demand uncertainties stemming from transmission network construction delays, timing of new power facility completions, and the expansion of hydrogen power generation, and will serve as a basis for future long-term LNG import contracts and infrastructure expansion. Changes in gas demand driven by the three major megaprojects—semiconductors, physical AI, and AI data centers—will be reconsidered after the 12th Basic Plan for Electricity Supply and Demand is finalized.

Strengthening resource security is also a key aspect of this plan. Based on the Special Act on National Resource Security, the government will expand private sector participation—including direct importers for self-consumption—within the previously public-centered natural gas stockpiling system. In addition, to reduce the burden of constructing new storage facilities, the use of existing public infrastructure such as Korea Gas Corporation's Samcheok terminal as national stockpiling bases is being considered.

The government will also establish an integrated natural gas supply and demand management system to monitor public and private import and inventory status in real time. This system will allow for real-time monitoring of national-level natural gas operations data and utilize AI-based crisis prediction and simulations to develop optimal response scenarios, thereby enhancing the overall supply management framework.

The import strategy will change as well. In order to reduce risks associated with Middle Eastern instability and policy changes in producer countries, the government plans to continue diversifying supply sources and increase LNG volumes secured through overseas resource development. To mitigate price shocks from spikes in the international spot markets, the government will increase the proportion of mid- and long-term contracts and build a portfolio utilizing various price indices, such as oil prices and U.S. gas prices (Henry Hub).

LNG trading functions will also be bolstered. The government will secure buffer supplies, introduce trading management systems, and enhance resilience throughout the supply chain by establishing joint terminal usage, LNG swaps, and emergency backup supply systems with neighboring Asian countries such as Japan.

Infrastructure expansion is planned as well. The government aims to increase LNG storage capacity from 6.71 million tons in 2025 to a maximum of 8.87 million tons by 2038 by expanding Korea Gas Corporation's Dangjin Terminal No. 5 and constructing additional private storage tanks. Tank expansions are also underway at private terminals in Gwangyang, Ulsan, and Yeosu, and additional storage facilities will be considered based on national energy security needs.

The pipeline network will also grow. By 2038, the government plans to extend major natural gas pipelines by 564 km—from 5,346 km currently to 5,910 km. Reinforcement of ring networks, pressure-boosting sections, and dedicated pipelines for power plants and direct importers is included, as well as linking private supply pipelines to the ring network to ensure a stable LNG supply for the Yongin semiconductor cluster. The government also plans a phased expansion of regasification and unloading facilities to meet peak winter demand and accommodate the growing number of large LNG carriers.

An official from the Ministry of Trade, Industry and Energy stated, “Going forward, it will become increasingly important to manage supply chain risk rather than simply forecasting demand. By establishing a stockpiling system that involves both the public and private sectors and deploying AI-based supply and demand management, we will further strengthen the stability and resilience of the national natural gas supply chain.”

This content was produced with the assistance of AI translation services.