Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 

MarketScreener Homepage  >  Equities  >  Korea Stock Exchange  >  Korea Shipbuilding & Offshore Engineering Co., Ltd.    A009540   KR7009540006


SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Stung by scandal, South Korea weighs up cost of curbing nuclear power

10/28/2013 | 04:01am EST
File photo of the Shin Kori No. 3 reactor of state-run utility Korea Electric Power Corp in Ulsan

SEOUL (Reuters) - It started with a few bogus safety certificates for cables shutting a handful of South Korean nuclear reactors. Now, the scandal has snowballed, with 100 people indicted and Seoul under pressure to rethink its reliance on nuclear power.

A shift away from nuclear, which generates a third of South Korea's electricity, could cost tens of billions of dollars a year by boosting imports of liquefied natural gas, oil or coal.

Although helping calm safety concerns, it would also push the government into a politically sensitive debate over whether state utilities could pass on sharply higher power bills to households and companies.

Gas, which makes up half of South Korea's energy bill while accounting for only a fifth of its power, would likely be the main substitute for nuclear, as it is considered cleaner than coal and plants can be built more easily near cities.

"If the proportion of nuclear power is cut, other fuel-based power generation has to be raised. If we use LNG, the cost will definitely go up," said Hwang Woo-hyun, vice president of state-run utility Korea Electric Power Corp (KEPCO) (>> Korea Electric Power Corporation).

KEPCO owns Korea Hydro and Nuclear Power Co Ltd (KHNP), which operates the county's nuclear reactors, and also has a quarter stake in Korea Gas Corp (KOGAS) (>> Korea Gas Corp), the world's largest corporate buyer of LNG.

The extra cost to Asia's fourth-largest economy of importing

more LNG to replace nuclear could be approaching $20 billion per year by 2035, according to Reuters calculations based on government projections for power capacity growth and South Korea's average LNG prices for last year.

South Korea could need as much as 25 million extra tonnes by 2035 if a proposal to reduce nuclear's share of its energy mix is drafted into power policy.

The cost projection could be conservative if rising demand from South Korea fuels further price rises in LNG. Top LNG importer Japan is also buying more gas than ever as it compensates for its own nuclear shutdown in the wake of the Fukushima disaster.


Three of South Korea's 23 reactors are offline due to the fake safety certificates, while another will be shut on October 30 to examine welding quality related to the safety of a steam generator.

Two others are also out for regular maintenance and a sixth one is shut, awaiting an extension of its 30-year life span. Of six reactors under construction, three have been delayed from start-up, also because of safety issues.

Authorities have indicted 100 people, including a former top state utility official, for corruption after the discovery of the fake safety certificates.

Politicians at a congressional hearing on Monday estimated the recent nuclear scandals have cost operator KHNP nearly 3 trillion won ($2.8 billion) in cable replacement, loss of power sales and payment to KEPCO to replace nuclear power with electricity from other fuels.

KHNP President and Chief Executive Cho Seok, who attended the hearing, confirmed the cost figure during the session.

The chaos in the industry comes as a government working group recommended on October 13 a cut in South Korea's reliance on nuclear power, pointing to a drop in public confidence in safety that has been exacerbated by Japan's Fukushima disaster.

The study recommended nuclear power capacity be kept between 22 and 29 percent of the total by 2035, well below existing plans to grow the sector to 41 percent in less than 20 years.

The government will hold public hearings to decide whether to back the recommendation before finalising its energy policy in December.

As of 2012, nuclear accounted for 26 percent of the total generating capacity, according to energy ministry data, though it typically accounts for about a third of power generation, while only making up about 3-4 percent of energy costs.

Coal made up about 31 percent and LNG 26 percent of the country's total power generation capacity last year.

Fuel costs for power by end-August, according to KEPCO, were 48 won per kilowatt-hour (kwh) for nuclear, 64 won/kwh for coal, 166 won/kwh for LNG and 226 won/kwh for oil.


Gas demand by South Korea has already been rising to make up for its nuclear power shortfall.

South Korea's LNG imports rose 12 percent from a year ago to 29.5 million tonnes in the first nine months of this year. Last year it imported 36.3 million tonnes of LNG.

Shares of KOGAS hit their highest in more than five months at 66,700 won on October 16, reflecting expectations of higher gas demand if the recommendation for less nuclear power is taken up.

Plugging the nuclear shortfall with imports of fossil fuels, could raise local electricity fares up to five-fold by 2030, according to local media.

The energy ministry has ruled out large electricity tariff hikes, however, saying low-cost nuclear generation will continue to contribute a large portion of total power supply even with a drop in its share of the capacity mix.

South Korea's utilities, meanwhile, are banking on consumers using less electricity if prices rise and on what they hope will be cheaper North American gas supplies later this decade.

A KEPCO official who asked not to be identified said the firm expected to receive cheap shale gas from 2017.

Before then, however, fuel costs could rise if nuclear power is replaced with higher cost fuels like gas, he said. ($1 = 1061.9 Korean won)

(Additional reporting by Florence Tan in SINGAPORE; Editing by Rebekah Kebede, Tom Hogue and Ed Davies)

By Meeyoung Cho

Valeurs citées dans l'article : Korea Gas Corp, Korea Electric Power Corporation

© Reuters 2013
Stocks mentioned in the article
ChangeLast1st jan.
DISCOVERY, INC. 4.60% 39.34 Delayed Quote.24.59%
HOPE, INC. 8.42% 2948 End-of-day quote.-34.42%
KOREA ELECTRIC POWER CORPORATION -2.03% 24150 End-of-day quote.-11.86%
KOREA GAS CORPORATION 1.19% 34100 End-of-day quote.10.36%
KOREA SHIPBUILDING & OFFSHORE ENGINEERING CO., LTD. -2.78% 105000 End-of-day quote.-3.23%
RISE, INC. -4.00% 24 End-of-day quote.0.00%
SHIFT, INC. 5.37% 13150 End-of-day quote.-8.11%
06:02aKOREA SHIPBUILDING & OFFSHORE ENGINE : DNV GL awards AIP to KSOE for wing sail p..
01/19MARKET CHATTER : Korea Shipbuilding Bags $79 Million Deal to Build LPG Carrier; ..
01/12MARKET CHATTER : Korea Shipbuilding Secures Two Oil Tanker Orders for $182 Milli..
01/11MARKET CHATTER : Korea Shipbuilding Bags Orders Worth $263 Million
01/05MARKET CHATTER : Korea Shipbuilding Bags Six Container Ship Orders Worth $830 Mi..
01/05MARKET CHATTER : Korea Shipbuilding & Offshore Engineering Nabs $823 Million Dea..
01/05MARKET CHATTER : Hyundai Heavy May Acquire Daewoo Shipbuilding within H1 2021
2020MARKET CHATTER : Korea Shipbuilding Expects Considerably More Orders in 2021
2020MARKET CHATTER : China's Antitrust Agency Approves Daewoo-Korea Shipbuilding Mer..
2020MARKET CHATTER : China's Antitrust Watchdog Clears Merger of Korea Shipbuilding,..
More news
Sales 2020 15 461 B 14,0 B 14,0 B
Net income 2020 60,1 B 0,05 B 0,05 B
Net Debt 2020 2 401 B 2,18 B 2,18 B
P/E ratio 2020 67,9x
Yield 2020 0,37%
Capitalization 7 708 B 6 969 M 6 991 M
EV / Sales 2020 0,65x
EV / Sales 2021 0,62x
Nbr of Employees -
Free-Float 57,6%
Duration : Period :
Korea Shipbuilding & Offshore Engineering Co., Ltd. Technical Analysis Chart | A009540 | KR7009540006 | MarketScreener
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 23
Average target price 123 434,78 KRW
Last Close Price 105 000,00 KRW
Spread / Highest target 42,9%
Spread / Average Target 17,6%
Spread / Lowest Target -26,7%
EPS Revisions
Managers and Directors
Oh-Gap Kwon Co-Chief Executive Officer & Director
Sam-Hyeon Gah Co-Chief Executive Officer & Director
Young-Chul Cho Chief Financial Officer & Director
Hyuk Choe Independent Director
Suk-Sig Lim Independent Director