POSCO, SK Corp to announce LNG contract in H2

South Korea's POSCO Co and SK Corp have closed a joint tender to buy term supply of 1.1 million tons of liquefied natural gas (LNG) a year and could award it in the second half of 2003, company officials said on Wednesday.

South Korea, the world's second-biggest LNG buyer after Japan, suffered an LNG shortage this winter as heating demand soared and is forecast to experience a shortage for the whole year unless fresh supplies are secured.

The tender would make steel-giant POSCO and SK Corp, the country's biggest refiner, the first private companies in South Korea to import the super-cooled gas.

The two companies plan to select negotiating partners in April and narrow down the list later on, POSCO spokesman Kim Jin-won told Reuters.

"It's highly likely that we are going to make contracts with more than one supplier," Kim said.

Final contracts would most likely be signed in the second half of 2003, SK Corp spokesman Sohn Dong-ha said.

The tender invited 10 companies, including firms from Australia, Malaysia, Indonesia, Oman, Qatar and Russia to offer supplies.

Officials at Oman LNG, Indonesian state-oil company Pertamina and Australia's North West Shelf operator Woodside had said they intended to take part in the tender.

POSCO wants to secure long-term supply of 500,000 tons a year while SK Corp is seeking between 350,000 tons and 600,000 tons.

POSCO has two gas-fired power plants in the southern ports of Kwangyang and Pohang, with a combined generation capacity of 845 megawatts (MW). SK Corp plans to build a 900-MW thermal power plant in Kwangyang by 2006.

Currently, state-run Korea Gas Corp (KOGAS) is the country's sole LNG importer and wholesaler, importing 16.9 million tonnes of LNG annually under long-term supply contracts with Indonesia, Malaysia, Oman, Brunei and Qatar. (*)