S. Korea fuel oil imports surge amid shutdown of power plants

SINGAPORE/SEOUL: South Korea’s move to shut coal-fired generators to control air pollution at the same time as nuclear reactors are going into scheduled maintenance is resulting in surging fuel oil imports, as utilities burn the dirty feedstock to meet power demand.

South Korea’s trade ministry said last month it would suspend five coal-fired power plants, with a combined capacity of 2.32 Gigawatts, from this month to June, part of a broad campaign to reduce pollution. That plan may backfire, at least in the short term.

A cold winter has raised power and heating demand, forcing utilities to burn more fuel oil in order to meet demand.

“Both from a pollution reduction and cost reduction perspective, it does not make sense to burn fuel oil,” said Bikal Pokharel, principal analyst at Wood Mackenzie.

While carbon emissions from fuel oil were just around 10 per cent less than coal, the operating cost of fuel oil was almost three times than that of coal, said Pokharel, while liquefied natural gas-fired plants emitted half the carbon compared to coal but cost almost twice as much to operate at current fuel prices.

“In the near term, fuel oil imports will increase to make up for the shortfall in coal-fired generation capacity,” said Pat Markey, managing director of consultancy Sierra Vista Resources.

Fuel oil imports by power producers into Asia’s fourth-largest