CEO Message Korea Gas Corporation President Hong Uirak: "LNG is a stepping stone for energy transition...leap toward 'future energy platform'"

Korea Gas Corporation President Hong Uirak emphasized the role of liquefied natural gas (LNG) as a "backup power source" to support power grid stability as renewable energy expands, and advocated for reforms to the electricity market's flexibility compensation system and improvements to the corporation's operational structure.

On the 12th, President Hong posted an article titled "Is LNG a stumbling block or stepping stone for energy transition?" on his Facebook page, stating: "Renewable energy and LNG are not competing energies, but energies that must be designed together while complementing each other's limitations."

President Hong first defined energy transition not as a simple replacement of energy sources, but as "changing the entire system from production and consumption of electricity, supply and demand, to storage and distribution." While expressing support for recent policy directions centered on renewable energy and nuclear power, he posed the question: "As the proportion of renewable energy increases, what will fill the gap during times when the sun is not shining and the wind is not blowing, or moments when electricity demand surges?"

He diagnosed that energy storage systems (ESS), pumped hydroelectricity, and expanded transmission networks alone have technological and economic limitations in responding to fluctuations in generation capacity due to weather and time. He explained that LNG, with its ability for rapid startup and power output adjustment, must serve as a "bridge fuel" and "backup energy."

In particular, he strongly called for reform of the electricity market's compensation system. President Hong stated: "To date, the electricity market has primarily operated centered on generation volume and unit generation cost," adding, "Going forward, the flexibility contributing to the power system—such as standby capacity of power generation facilities, rapid startup, power output adjustment, and reserve provision—must also be fairly evaluated and compensated." This aligns with discussions on electricity market system reforms such as the government's push to introduce real-time and ancillary service electricity markets to address expanding renewable energy variability.

At the same time, he made clear that LNG, as a fossil fuel, must confront its limitations and evolve into a low-carbon and decarbonized energy. President Hong stated: "A bridge is meant to be crossed, not to be stayed on," and identified as key tasks: ▲minimizing methane emissions in the supply chain ▲expanding facility electrification and carbon capture and storage (CCUS) ▲developing hydrogen blending and complete hydrogen conversion technology ▲introducing e-methane and biomethane that can utilize existing pipeline infrastructure. He added that institutional and policy support, such as establishing the legal status and certification standards for e-methane, must accompany these efforts.

He also presented measures to strengthen purchasing power for ensuring supply stability and economic efficiency. The vision is to appropriately combine long-term contracts and spot purchases in preparation for uncertainties in the international LNG market, and to enhance joint purchasing and trading capabilities to strengthen pricing negotiation power and market responsiveness.

President Hong stated: "Korea Gas Corporation must not remain a company that simply imports and supplies LNG," emphasizing: "While strengthening purchasing power and trading capabilities, we must prepare the supply foundation for future low-carbon gases such as hydrogen and e-methane, and develop existing infrastructure into a 'future energy platform.'"

President Hong's remarks are interpreted as reflecting an awareness that policy and institutional backing are urgently needed to address the dual challenge of resolving power grid instability from expanding renewable energy and achieving decarbonization in the natural gas industry.

However, there are considerable practical hurdles to overcome. While allaying environmental concerns about fossil fuel dependency and dispelling worries about stranded assets in existing pipeline networks, Korea Gas Corporation faces another challenge: securing astronomical investment resources and economic viability for building clean hydrogen and e-methane infrastructure amid the corporation's severe financial constraints, including massive receivables in the billions of won and high debt-to-equity ratios. This will likely be a critical factor in realizing the future vision.