POSCO International’s Gwangyang LNG Terminal 1 (Courtesy of POSCO International)
POSCO International Corp., the general trading and energy exploration unit of South Korea’s steel giant POSCO Holdings Inc., is considering acquiring a local company in the booming US natural gas industry, according to sources on Monday.
During its investor day dubbed the 2024 Energy Business Value Day held on Oct. 17 and 18, POSCO International is said to have unveiled a plan to advance into the North American natural gas market.
It is said to be highly interested in the natural gas terminal sector, which requires less investment due to its lower barriers to entry than other natural gas businesses such as natural gas production and gas liquefaction and shipping.
In the past, the Korean energy company attempted to take over a gas terminal business in Texas in the US.
“We are in the very early stages of talks,” said an official from POSCO International. “Even if we proceed with an M&A, it would take some time before we acquire (a company).”
The US natural gas industry has grabbed the attention of the Korean company as the world’s largest economy’s natural gas industry is in its heyday thanks to the country’s shale gas and oil boom, which has transformed the US into the world’s largest gas producer and exporter.
POSCO International’s 2024 Energy Business Value Day held on Oct. 17 and 18, 2024 (Courtesy of POSCO International)
US NATURAL GAS BOOM
At the same time, the global demand for gas is insatiable partly due to the world’s efforts to phase out dirtier fuels like coal.
“The US is only a handful of countries capable of exporting natural gas,” said an industry official. “Any company can expect huge profit if it transfers natural gas produced from its directly invested gas well (in the US) to the Southern US with many ports via pipelines and then exports it in ships.”
POSCO International also has enough ammunition to tap mergers and acquisitions considering that it is expected to reap 1.2 trillion won ($871.1 million) in operating profit this year.
In the long term, POSCO International plans to foray into other parts of the US natural gas value chain, including the upstream covering exploration and production and midstream in charge of transportation, storage and trade.
In 2022, POSCO International absorbed its affiliate POSCO Energy Co., which managed the operation of liquefied natural gas (LNG) storage facilities, to enhance its presence in the global LNG business market.
Previously, POSCO International was responsible only for importing LNG.
This summer, the company completed the construction of its LNG terminal, which was Korea’s first privately run LNG storage and regasification facility, in Gwangyang with a storage capacity of 930,000 kiloliters.
POSCO International is also building a second LNG terminal near the first terminal, and it will have a total storage capacity of 1.33 million kiloliters once the second terminal is built.
The expanded storage capacity will make POSCO International Korea’s largest private LNG terminal operator and the 11th player in the world.
By Sang Hoon Sung
uphoon@hankyung.com
Sookyung Seo edited this article.
