S&P Expects Korea Gas Corp. to Deliver Stable Earnings as Debt Levels Decline

(Seoul=Yonhap Infomax) Jae Heon Lee – Global credit rating agency Standard & Poor’s (S&P) has projected that Korea Gas Corporation (KOGAS), South Korea’s state-run natural gas supplier, will maintain stable earnings while gradually reducing its debt burden.

In a report released on the 21st, S&P stated, “Korea Gas Corporation’s third-quarter revenue and operating profit declined by approximately 6% and 11% year-on-year, respectively, due to lower liquefied natural gas (LNG) prices and adjustments in gas tariffs for power generation.” However, the agency added, “We expect revenue to stabilize by 2026 as LNG prices normalize.”

S&P further noted, “EBITDA (earnings before interest, taxes, depreciation, and amortization) is estimated at around 4.6 trillion won ($3.89 billion) in 2026, with profitability expected to dip slightly from 2024, when one-off gains were recorded due to falling LNG prices.”

The agency forecasts that KOGAS’s total borrowings will decrease moderately from 40.5 trillion won ($34.2 billion) last year to about 38 trillion won ($32.1 billion) this year and 37 trillion won ($31.3 billion) in 2025, citing lower LNG procurement costs as a driver for the reduction in short-term debt.

However, S&P cautioned, “Further debt reduction will require the collection of outstanding receivables. If gas tariffs are not adjusted, the outlook for receivables recovery remains uncertain.”

The report also highlighted that, while tariffs for power generation are adjusted regularly, city gas tariffs have not kept pace with rising costs. “Prolonged tariff freezes in 2022–2023 led to a significant increase in KOGAS’s accumulated receivables,” S&P added.

jhlee2@yna.co.kr

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