South Korea: Kogas retains its appetite for LNG imports
KOREA GAS Corporation (Kogas), the world's largest corporate buyer of liquefied natural gas (LNG), remains eager to secure new supplies despite the global gas glut. The immediate signs are bearish: South Korea imported 2.48m tonnes (3.4bn cubic metres) of LNG in October, up by 37% from a year earlier, but Kogas' gas sales fell by 10.4% to 1.63m tonnes, which pushed up inventories.
In addition, the company recently delayed signing a new supply agreement with Indonesia's Tangguh project because of the ample availability of LNG in the marketplace. Kogas has also said it expects to have a higher-than-normal LNG surplus of 1.01m tonnes by the end of March because of slow demand.
Yet despite the negative picture, officials believe demand is poised to pick up and Kogas remains a buyer of LNG. It expects to import almost 4m tonnes a year (t/y) of extra LNG by the end of the year, on top of an estimated 26.5m t/y in 2009.
Kogas has secured future LNG supplies from a number of sources in recent months, including an agreement to take 1.5m t/y from Chevron's Gorgon project in Australia over 15 years. Kogas is also to take 2m t/y from the $4.5bn Yemen LNG project, led by Total, in which the South Korean company holds a 6% stake. Production at the 6.7m t/y capacity plant started in October.
Kogas is also turning to alternative gas-related energy sources, having signed an agreement to invest $345m in a dimethylether (DME) plant in Jubail, Saudi Arabia. DME provides a cheaper, cleaner alternative to liquefied petroleum gas (LPG), and can be made from natural gas, landfill methane, coal and biomass. The source gas is converted to synthesis gas (syngas), from which methanol can then be produced. Kogas said in October the plant would produce 300,000 t/y of DME from 2013. According to Saudi media, the deal was formally signed in November.
Separately, the South Korean government says the company may issue new shares in 2010 to finance exploration projects abroad – the state owns 60% of Kogas. The government wants to retain at least 51%, but has yet to decide whether to participate in the share sale itself.
In September, Kogas said it was thinking of boosting its market capitalisation to W8 trillion ($6.94bn) by 2013, compared with around W4 trillion in 2009, but gave no timetable for doing this. The company said the plan could involve the sale of W2 trillion of new shares by 2013 to buyers within and outside the country – in the form of depositary receipts.