Shares of Korea Gas Corp (KOGAS) (036460.KS: Quote, Profile, Research) rose nearly 3 percent on Wednesday a day after the government announced it will hike gas prices by half later this year, to pass on a doubling in import costs.

The hike is likely to add to inflation pressures in South Korea, the world's 10th-largest energy consumer and No.5 crude oil importer, as the government already said it was considering allowing electricity price hikes in the latter half of the year.

Shares of KOGAS, the world's largest commercial importer of liquefied natural gas (LNG), were up 2.9 percent as of 0320 GMT, and outperforming the wider market's 1 percent loss.

"The energy ministry is in talks with the finance ministry to divide the rise into three stages -- in August, September and November," said Joo Ik-chan, analyst at Hana Daetoo Securities, adding the hike will lift investors' concerns over high raw material prices.

Policymakers have been warning of the danger of commodities-led inflation after data showed that June import prices measured in local currency terms scored the fastest annual rise in more than 10 years. [ID:nSEO245456]

"The government has put a lid on price gains in the past few months to help contain inflationary pressure, but such measures can no longer be maintained since LNG import prices have more than doubled from a year ago," an official at KOGAS said, adding it would be impossible for local utilities to continue to supply power and fuel at current prices.

Coal accounts for about 41 percent of South Korea's power generation, while 37 percent is from nuclear power. LNG accounts for 16 percent, and about 4 percent of the country's energy is derived from heavy fuel oil.

Prices for gas used in private homes could rise by 30 percent, while industrial use gas tariffs may be hiked by 50 percent, Seoul's energy ministry said, likely prompting a sharp rise in transportation fees. 

Soaring energy costs due to crude oil gains have caused massive strikes and protests around the world. South Korea's truckers union went on a strike last month over high diesel prices, paralysing the export-dependent economy.

In Indonesia, massive protests occured after the government raised fuel prices by almost 30 percent in May.

Oil prices have risen nearly 50 percent since the start of the year, driven partly by geopolitical fears from Iran and Nigeria, as well as expectations that global supplies will fail to keep pace with unrelenting demand growth in the years ahead.

Investors have also been pumping cash into oil and other commodities this year, looking for a safe bet against inflation and a sliding dollar, pushing up crude oil prices.

Last month, the government promised around 1.2 trillion won ($1.19 billion) to gas and electricity firms as compensation for their estimated losses resulting from frozen fares in the first six months of the year.

In May, state-run Korea Electric Power Corp (KEPCO) (015760.KS: Quote, Profile, Research) said its fuel costs would rise 2 trillion won this year due to higher oil and coal prices, and posted an operating loss of 219 billion won in the first quarter.

KOGAS will report its second-quarter earnings on July 29.