Korea Gas Corp. (KOGAS) has turned to regulatory reform to overcome a crisis caused by low global crude oil prices. KOGAS’s strategy to reform regulations that have turned out to be inefficient is being expected to have double the effect of lowering costs and lowing gas fares.
A main focus is the revision of regulations on the installation of emergence gas devices to move gas pipelines KOGAS has made in consultation with the central government. The revision allows exceptions of the regulation that requires the installation of emergency gas devices. The step is expected to save some 116.6 billion won in related costs.
With LNG gas supply lines stretching 4,250 km across the nation, KOGAS has to carry out an average 30 projects to move gas pipelines annually. The projects are necessary due to subway construction work and other underground projects. In the past, whenever gas pipelines were relocated, KOGAS was required to install emergency gas devices, causing additional installation costs and a flood of complaints from neighborhood residents who do not want such facilities, known as the “not-in-my-backyard” syndrome.
KOGAS started to handle a proposal to revise the regulation in question by forming a consultative boy with the Ministry of Trade, Industry and Energy and the Korea Gas Safety Corp. in 2014.
KOGAS has seven steps in place to reinforce the safety of related pipelines, including a system designed to monitor vibrations, in return for removing the requirement of installing emergency gas devices.
The new regulatory reform measure led to KOGAS’s saving of 30.9 billion won in facility investment costs from 12 cases of relocated pipelines. All were done in 2015. The new step earned KOGAS the 2015 Best Practice Award in recognition of making achievements based on sharing, openness, communication and cooperation in line with the Government 3.0 Initiative.
KOGAS prioritizing the elevation of safety to world-class standards as regulatory reform. The corporation made achievements in terms of safety management last year, KOGAS officials said. KOGAS saw gas accidents involving the corporation and its cooperative partners drop from 14 cases in 2014 to seven in 2015, said the officials, adding that there were no accidents involving casualties. The corporation’s industrial accident rate stood at zero in 2015, compared to 0.18 percent in that of the electricity and gas industries in 2014. KOGAS plans to elevate its safety culture level, called ICRS-C Index, from the current 6.99, higher than the nation average of 4.8, to up to 8.1 on a scale of 10 in a mid- and long-term perspective.
Kogas to Continue Oil Exploration Overseas Despite Slowdown
KOGAS President Lee Seung-hoon said overseas resources development should continue without interruption, as the price of oil is expected to rise in less than two years.
In his first interview with the media since his inauguration as the Kogas CEO in July 2015, he said the price of energy changes fluctuates regularly.
When the price of oil drops, consumption increases and if consumption rises, the price inevitably rises back up. Oil prices have not rebounded yet because the installations to consume more energy have yet to be completed.
He projected that oil prices will rebound in about two years. He said that prices had taken about a year to bounce back in the past, but this time will take longer because it’s coupled with a serious downturn in the global economy, badly reducing oil consumption.
Exploration for natural resources overseas should continue as it did before oil prices fell, he said.
The troubles currently facing the Kogas CEO include a reduction in Kogas sales and restructuring of the company’s overseas resources exploration.
About KOGAS
Since its founding in 1983, it has grown to become the world's largest LNG importer. As the nation's sole LNG provider, the corporation is fully committed to providing clean, safe and convenient energy to the people of Korea. In keeping with this mission, KOGAS currently operates four LNG terminals and a nationwide pipeline network spanning over 4,240km in order to ensure stable supply for the nation.
KOGAS imports LNG from around the world and supplies it to power generation plants, gas-utility companies and city gas companies throughout the country. It produces and supplies natural gas, purifies and sells gas-related by-products, builds and operates production facilities and distribution network, and explores, imports and exports natural gas for domestic and overseas markets.
KOGAS received the sovereign credit rating of A1 and A, the highest credit rating ever given to a Korean company by the Moody's and S&P. On the foundation of its accumulated experience and expertise, the Corporation is actively developing new technologies, expanding the scope of businesses, and participating in foreign projects in our efforts to realize our goal of becoming a leading integrated energy company in the world.
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