POSCO International eyes M&A in US natural gas market

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. 17-18, POSCO International is said to have unveiled a plan to advance into the North American natural gas market.

It is said to be keenly interested in the natural gas terminal sector, which requires less investment due to its lower entry barriers 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 the US state of Texas.

“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 Korean company's attention as the US natural gas industry is enjoying a 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.

US NATURAL GAS BOOM

At the same time, the global demand for natural 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 a huge profit if it transfers natural gas produced from its directly invested gas well (in the US) to the US South with its many ports via pipeline and then exports it by ship.”

Moreover, POSCO International has enough funds to tap M&As considering it is expected to reap 1.2 trillion won ($871.1 million) in operating profit this year.     

In the long run, POSCO International plans to foray into other parts of the US natural gas value chain, including upstream covering exploration and production and midstream handling 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 bolster its presence in the global LNG business market.

Earlier, POSCO International was only responsible for importing LNG.  

This summer, the company completed construction of its LNG terminal, which is Korea’s first privately run LNG storage and regasification facility, in the southern port city of Gwangyang, with a storage capacity of 930,000 kiloliters.

POSCO International is also building a second LNG terminal near the first terminal. Once the second one is completed, total storage capacity will reach 1.33 million kiloliters. 

The expanded storage capacity will make POSCO International Korea’s largest private LNG terminal operator and the 11th-largest player in the world.

Write to Sang Hoon Sung at uphoon@hankyung.com
Sookyung Seo edited this article.