South Korea announces LNG agreements worth $84 billion

• 12 years ago (2011-08-18)
• Junior Isles

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South Korea has announced long-term agreements with Royal Dutch Shell and Total, worth Won90 billion ($84.1 billion), to buy from LNG projects in Australia.

South Korea currently has contracts with LNG suppliers in Indonesia, Malaysia and Brunei, but these are due to expire in 2013-15. These new agreements would replace them and are worth $84.1 billion over their lifetime, making them the largest long-term gas supply agreements.

Under the new contracts, state-run Korea Gas Corp (KOGAS) will import 5.64 million t/a, equivalent to around 20 per cent of its 2010 LNG imports, during the 2013-35 period.

KOGAS will also acquire a 10 per cent stake with an additional investment of $1.5 billion in Shell’s fully-owned Prelude project in Australia, the economy ministry said. This follows Samsung Heavy Industries Co Ltd building of a giant vessel in the country to process and liquefy gas from the project.

“Everyone has been waiting for KOGAS to sign up for Prelude because it’s being built there – it’s a matter of national pride that the first floating LNG is being built in their yards. That was always going to happen,” says Noelle Leonard, a consultant for Facts Global Energy.

The purchase of the Prelude stake adds to the Korean gas company’s growing portfolio of Australian projects. KOGAS already owns a 15 per cent stake in Santos-led Gladstone 7.8 million t/a coal seam gas project and has also signed preliminary agreements with Chevron for product from the Wheatstone and Gorgon projects. The company is also negotiating with Chevron for a stake in the former.