UPDATE 1-Two Indonesia LNG cargoes to S.Korea cancelled

Wed Nov 14, 2012 8:07am EST

* Cancelled volume is equivalent to 0.3 pct of consumption

* S.Korea LNG inventory at over 80 pct of storage capacity

* No supply crunch seen due to LNG cargo cancellation

* Seoul already faces power shortage due to reactors closures (Adds details and quotes)

By Meeyoung Cho

SEOUL, Nov 14 (Reuters) - South Korea has lost two December liquefied natural gas (LNG)shipments from Indonesia after a fire at a terminal there, its economy ministry said on Wednesday.

December shipments of two spot liquefied natural gas (LNG) cargoes with a combined volume of 120,000 tonnes were cancelled due to the shutdown of Indonesia's Tangguh LNG train 2 caused by the brief fire earlier this month.

The cancelled volume was equivalent to 0.3 percent of South Korea's natural gas consumption at 35.41 million tonnes of LNG equivalent, the ministry said in a statement.

LNG inventory in the world's second-largest importer after Japan remains at more than 80 percent of its storage capacity, helping to avoid any supply squeeze, the statement added.

Asia's fourth-largest economy already struggles to ensure power supply this winter after two nuclear reactors have been closed to replace parts that were supplied with fake documents, and shutdown of another reactor also has extended due to microscopic cracks.

"The economy ministry will continue to monitor supply and demand of natural gas closely, and if necessary it will secure alternative suppliers to ensure the gas supplies," the ministry statement said.

It added POSCO and SK E&S were expected to receive their December LNG cargoes under term contracts with Tangguh by the end of this year without disruption.

Indonesia's Tangguh LNG train 2 was shut during scheduled maintenance on the field's Train 1 and may not resume operations for up to two months, Indonesia's oil and gas regulator BPMigas said on November 10.

During the restart process for Train 1 on November 6, an overheating problem was found that caused a fire in the Train 2 refrigerant unit, forcing Train 2 to be shut down, BPMigas had said.

The Tangguh gas field in West Papua province is managed by a consortium of companies led by BP and CNOOC Ltd. , China's top offshore oil and gas producer, as well as Japan's Mitsubishi.

Korea Gas Corp (KOGAS), the world's top corporate buyer of LNG, said last month it would buy more gas on the spot market to meet winter demand and put its stocks at 3.37 million tonnes as of end-September, or 86 percent of storage capacity. (Reporting by Meeyoung Cho; editing by William Hardy)