Korea Gas Corporation (KOGAS) has witnessed the first tangible results from its 14-year investment in North America's liquefied natural gas (LNG) sector. According to industry reports on the 26th, the long-awaited "LNG Canada" project—of which KOGAS holds a 5% stake—is nearing completion, with production expected to commence as early as August. Despite this milestone, political pressures over the past decade significantly reduced the company's returns, slashing its potential LNG deliveries from 2.8 million tonnes annually to just 700,000 tonnes.

Located in British Columbia's Kitimat region, LNG Canada is a state-of-the-art LNG liquefaction facility with an investment cost of $40 billion. Designed for long-term operations, the facility is expected to run for 40 years following the start of production. The first LNG production train was finalized earlier this year, with initial shipments scheduled between June and July, and KOGAS’s portion of 700,000 tonnes anticipated for delivery in August.

KOGAS originally held a 20% stake in LNG Canada, which would have guaranteed it 2.8 million tonnes of LNG annually—equivalent to 7.9% of its 2023 total LNG import volume of 35.48 million tonnes. However, political interference drastically altered the company's stake. During the administrations of Park Geun-hye and Moon Jae-in, policies aimed at reducing public enterprise debt and scrutiny of overseas resource development projects initiated by the Lee Myung-bak administration led to two stake sales. KOGAS first sold 5% of its stake in April 2014, followed by a further 10% in May 2018. As a result, the company now holds only a 5% stake, significantly reducing its annual secured volume and limiting the financial benefits of its initial investment.

The reduction in KOGAS's stake has financial implications. If the original 20% stake had been maintained, the company could have reduced its LNG import costs by 2.5 trillion won annually, based on the current import price of $633.63 per tonne. This outcome highlights the substantial impact of political decision-making on overseas resource development ventures.

Over the past two decades, Korea's approach to overseas resource development has faced significant challenges, often resembling a "roller coaster" ride due to shifts in political priorities. During the Lee Myung-bak administration, aggressive resource diplomacy led to public enterprise debt accumulation. Subsequent governments, however, largely scaled back overseas investments, citing inefficiencies and controversies. Meanwhile, Japan has successfully expanded its global resource development footprint, more than doubling its efforts compared to Korea.

The completion of LNG Canada marks a partial success for KOGAS, but it also serves as a reminder of the consequences of political interference in long-term energy investments.