Kogas says no to Australia LNG import pact

Korea?s Korea Gas Corp. said on Wednesday told Australia's LNG Pty., or ALNG, that it can't commit to purchasing liquefied natural gas from ALNG now due to ongoing restructuring in Korea's gas industry.

During his visit to South Korea, the vice president of ALNG, Jeff Feltham, met with Kogas president and chief executive, Kim Myung-Kyu, Wednesday and requested that Kogas buy LNG from Australia, a Kogas official said.

Kim said Kogas can't sign new LNG contracts now due to the government's plan to sell Kogas' LNG import and wholesale operations to the private sector, the official said.

South Korea, the second largest LNG importer in the world after Japan, imports 97% of its LNG needs through long-term agreements and buys the rest through spot deals.

South Korea's gas industry restructuring involves splitting Kogas' import and wholesale operations into three entities this year and selling two of them to the private sector by end-2002.

According to the official, new LNG purchase agreements won't be possible at least until bills related to the gas industry restructuring are approved at the National Assembly.

However, legislation needed to privatize Kogas and restructure the gas sector has been blocked in the National Assembly. The government is hoping to get the bills passed by April.

State-run Kogas has held a monopoly in importing and distributing natural gas in South Korea but the restructuring plan will transfer the signing contract responsibility to the new import and wholesale companies.

A government official previously said it is uncertain who will have the authority to sign the new contracts but that Kogas at present doesn't have that authority.

Kogas has long-term contracts with Indonesia, Malaysia, Qatar, Oman and Brunei to import 16.86 million metric tons of LNG a year.

The earliest expiring contract is with Indonesia in November 2007; the latest ones are with Qatar and Oman, both expiring in December 2024.(*)