POSCO, Tangguh LNG sign $2 billion LNG deal

South Korea steel maker POSCO and Tangguh LNG project operated by Anglo-American oil gaint BP Plc on Thursday signed a US$2 billion contract to enable the former to purchase 550,000 tons per annum of LNG for 20-year period starting mid 2005.

The deal with POSCO was part of a total of 1.1 million tons of LNG import commitment from two South Korean firms, POSCO and petrochemical firm SK Corp, which now has changed name to KPower.

The deal is the first LNG contract made to South Korean private sector.

Deputy for finance at upstream oil & gas authority BP MIGAS Eddy Purwanto told Petromindo.Com that the LNG price for POSCO, which is tied to crude prices, is significantly higher than the price on Fujian LNG contract.

Eddy Purwanto added that the contract with SK Corp is expected to be signed end of this month (July).

POSCO is spending US$290 million to build the Gwangyang LNG terminal to return about 1.7 million tons a year of LNG to gas form to fire its two power plants at its steel mills with combined capacity of 845 MW. The company said this LNG contract is aimed at to locking in an annual cost savings of approximately $39 million.

The deal with POSCO is the second deal for Tangguh after its bagged 2.6 MTPA deal to supply LNG to the Chinese province of Fujian.

Meanwhile, Anne Quinn, BP's Group Vice President Gas, Power and Renewables said that BP was expecting to close 3.7 MTPA LNG deal with US energy firm Sempra Energy to supply LNG to west coast of US. (alex)