South Korea Oil And Gas Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

South Korea Oil And Gas Market Trends and Insights

LNG Import-Capacity Expansion & New Private Terminals

South Korea's oil and gas market momentum gains from a new wave of privately financed LNG terminals that diversify supply routes beyond KOGAS's legacy network. POSCO International's Gwangyang facility—South Korea's first private terminal—adds 1 million tons annual capacity and catalyzes third-party procurement.^{[1]POSCO International, “Gwangyang LNG Terminal Factsheet,” posco-international.com} Concurrently, the KRW 1.4 trillion Yeosu Myodo project, slated for completion in 2026, introduces a 3 million-ton import capability with hydrogen-ready tanks. These expansions elevate national import capability to 65 million tons by 2027, enabling portfolio optimization among suppliers in Australia, Qatar, and the United States. Heightened competition lowers delivered gas costs for power generators and petrochemical users, while modular design eases future conversion to blue ammonia or liquid hydrogen handling. Strategic redundancy further insulates the South Korean oil and gas market from geopolitical shocks, thereby reinforcing its energy security prerogatives.

Jet-Fuel-Led Rebound in Refining Margins

Aviation traffic through Incheon International Airport rebounded to 75 million passengers in 2024, lifting jet-fuel cracks for Korean refiners to multi-year highs.^{[2]SK Innovation, “Q4 2024 Earnings Release,” skinnovation.com} SK Innovation reported 40% higher jet-fuel margins year-over-year in Q4 2024, supplying carriers across Northeast Asia. GS Caltex optimized its Yeosu hydrocracker to reach 18% jet-fuel yield, while S-Oil’s USD 6.9 billion Shahin complex targets a 20% yield by 2026. Robust cash flows fund decarbonization retrofits such as carbon-capture units and hydrogen co-firing, sustaining competitiveness despite falling gasoline demand. The uplift also supports dividend stability, preserving investor confidence during the energy transition. As international travel continues to grow, jet-fuel-rich slates provide refiners a margin hedge until electric-aviation alternatives mature.

Expansion of Strategic Crude & Fuel Stockpiles

KNOC’s joint stockpiling deals with Kuwait Petroleum Corporation, Saudi Aramco, and ADNOC added 13.3 million barrels of storage without direct public expenditure. Foreign suppliers obtain proximity to Asian buyers, while South Korea secures an emergency supply that comfortably exceeds the IEA’s 90-day requirement. Rental fees create a predictable revenue stream that offsets KNOC’s debt-service obligations. Expansion plans include refined-product and hydrogen-carrier storage, future-proofing assets as fuel mixes evolve. By doubling as a regional commercial hub, the South Korean oil and gas market attracts trading houses seeking resilient inventory positions.

Hydrogen & Blue-Ammonia Build-Out Leveraging LNG Assets

Leveraging idle send-out capacity, SK E&S commissioned a 30,000-ton-per-year hydrogen liquefier in Incheon, interconnected with the existing LNG pipework. Government-backed 20-year clean-hydrogen PPAs de-risk new offtake, turning stranded LNG gear into growth engines. POSCO International’s blue-ammonia pier at Gwangyang, designed for an annual throughput of 1 million tons by 2027, showcases a capex-light reconfiguration of tanks, jetties, and vaporizers. These initiatives compress rollout timelines compared to greenfield builds, supporting South Korea’s ambition to supply 30% of its domestic power with clean hydrogen and ammonia by 2036. Synergies between LNG and hydrogen create a transition bridge that sustains midstream cash flow.

Structural Decline in Gas-Fired Power Demand Post-2030

The 10th Basic Plan trims gas-fired generation’s share from 32.1% in 2022 to 21.6% by 2036, eroding long-term LNG baseload. Accelerating solar and wind rollouts, as well as nuclear restarts, displaces flexible gas, while K-ETS carbon prices narrow spark spreads. Korea Southern Power’s pledge to retire 2.4 GW of gas capacity by 2035 demonstrates growing momentum towards closure.^{[3]Korea Southern Power, “2025–2035 Generation Portfolio,” kospo.co.kr} Lower plant load factors and pressure on offtake contracts jeopardize new LNG terminal economics. Operators mitigate risk by co-firing hydrogen blends, yet material volumes remain years away. Consequently, stranded-asset provisions weigh on balance sheets across the South Korean oil and gas market.

LNG Terminal Over-Build & Stranded-Asset Risk

Aggregate import capability could reach 65 million tons by 2027, compared to a projected 52 million ton demand peak in 2029, resulting in a 20% structural surplus. Utilization below 70% undermines debt-service coverage ratios, particularly for new private terminals that leverage project finance. Yeosu Myodo’s 3 million ton addition coincides with the electrification of petrochemical furnaces, hastening demand erosion. Asset owners explore diversifying into hydrogen, but conversions require new capital expenditures and regulatory clearance. Credit-rating agencies already flag terminal-specific downgrade risks, elevating refinancing costs within the South Korean oil and gas market.

Segment Analysis

By Sector: Refining Scale Sustains, Midstream Leads Growth

The downstream segment commanded 63.7% of the South Korean oil and gas market share in 2024, anchored by 3.2 million barrels per day of world-scale refining capacity located at Ulsan, Yeosu, and Onsan. Export-oriented product slats generate stable forex earnings and underpin the South Korean oil and gas market size for downstream players. High-complexity indices allow flexible crude selections, preserving gross refining margins under volatile feedstock differentials. Meanwhile, the midstream segment, although smaller, advances at a 5.1% CAGR to 2030, driven by LNG-terminal additions, hydrogen pipelines, and strategic stockpiling initiatives that position South Korea as Northeast Asia’s hub. Integrated operators are increasingly viewing midstream investments as a bridge to future hydrogen logistics, leveraging brownfield assets to minimize capital expenditures.

Strategically, downstream majors embark on deep-integration projects, such as S-Oil’s USD 6.9 billion Shahin complex, which couples fuel production with olefins, aromatics, and hydrogen-ready units. Such megaprojects extend value chains and mitigate declines in refined-product demand. Midstream players capitalize on policy incentives, including tax credits for blue-ammonia import facilities, and collaborate with utilities to pool offtake risk. This dual-track evolution preserves cash flow today while positioning the South Korean oil and gas market for low-carbon competitiveness.

Note: Segment shares of all individual segments available upon report purchase

By Location: Coastal Concentration, Offshore Upside

Onshore infrastructure accounted for 79.5% of the South Korean oil and gas market size in 2024, reflecting the coastal industrial clustering that optimizes feedstock logistics and export channels. The Ulsan-Onsan corridor alone processes 1.4 million barrels per day and hosts petrochemical integration that boosts value capture. Dense pipeline grids and storage caverns reduce trucking emissions and enhance supply resilience. Yet offshore exploration grows at a 6.3% CAGR as KNOC’s East Sea program enlists ExxonMobil, Chevron, and TotalEnergies to probe 3.5–14 billion-barrel prospects in 1,000-2,000 meter waters.

Offshore success could reshape the South Korean oil and gas industry by lowering import dependency and spawning domestic service ecosystems. Local shipbuilders, already global leaders in FPSO production, prepare modular production units tailored to Korean waters, creating synergies between the maritime and energy sectors. Environmental stakeholder engagement, however, remains pivotal to securing drill permits amid heightened ecological scrutiny.

By Service: Construction Dominance, Decommissioning Upswing

Construction services accounted for 53.3% of total revenue in 2024, driven by EPC demand for LNG storage tanks, hydrogen liquefiers, and refinery upgrades. Domestic contractors utilize advanced project-management software and modular prefabrication, which compress schedules and reduce costs. Simultaneously, predictive-maintenance software packages become standard deliverables, unlocking recurring service fees post-handover. The decommissioning niche, although smaller, advances at a 5.9% CAGR amid planned gas-plant retirements and aging refinery units slated for closure by 2036.

Specialists in hazardous-waste handling, soil remediation, and materials recycling are position for multi-year dismantling contracts valued at USD 3.2 billion. Joint ventures with European decommissioning experts provide technology transfer while cultivating local supply chains. Maintenance and turnaround firms are integrating drones and robotics for flare-stack inspections, thereby minimizing downtime and safety incidents, and enhancing service-sector profitability within the South Korean oil and gas market.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

The South Korean oil and gas market remains geographically concentrated along the southeast and southwest coasts, where integrated complexes leverage deep-water ports and proximity to export lanes. The Ulsan-Onsan basin hosts 44% of refining throughput, enabling economies of scale that anchor national fuel supply and petrochemical feedstock flows. Yeosu’s 800,000 barrels-per-day GS Caltex refinery integrates with downstream chemical parks, maximizing the utilization of propane and naphtha. Busan and Ulsan ports facilitate the import of crude oil and the export of refined products, reinforcing their coastal dominance.

Seoul-Gyeonggi, although landlocked, consumes 38% of total refined-product demand, driven by manufacturing, logistics, and burgeoning data center clusters that increasingly source specialty lubricants and immersion cooling fluids. Pipeline connectivity to coastal terminals ensures a reliable supply, while planned hydrogen highways aim to link production hubs to metropolitan fueling stations beginning in 2027.^{[4]Ministry of Trade, Industry and Energy, “Hydrogen Economy Roadmap Update 2025,” motie.go.kr}

Offshore, the East Sea exploration corridor extends 200-300 kilometers from shore, benefiting from nearby shipyards at Geoje and Ulsan, which are capable of constructing topsides and subsea modules. Discovery success would promote a domestic offshore services hub, leveraging Korea’s shipbuilding prowess for regional projects. Existing LNG carriers could be repurposed for the floating storage of blue ammonia exports, thereby amplifying the synergy between the maritime and energy sectors across the South Korean oil and gas market.