Regional LNG: KOGAS in LNG swap with Chubu Electric: Report

Korea Gas Corp (KOGAS), the world's biggest buyer of liquefied natural gas (LNG), has agreed to supply 60,000 tonnes of the fuel to Chubu Electric Power Co. in September in a swap deal aimed at meeting Japan's peak demand, a source told Reuters on Monday.

Japan and South Korea, the world's top LNG buyers, swap leftover cargoes with each other regularly to manage fluctuations in demand. While Japan needs extra supplies in its peak summer season, South Korea needs winter cargoes.

In return for the September cargo, Chubu will send the same amount to state-controlled KOGAS in January when South Korea's demand reaches a peak for home heating, a KOGAS source told Reuters.

The latest deal between the two companies is the third this year, taking the total swap volume agreed to around 180,000 tonnes.

"There are a couple of more Japanese companies who want to make swap deals as demand there is at its peak now," said the KOGAS source. "We are actually in talks for another swap deal with Japan possibly, but nothing has been decided yet."

KOGAS has traditionally swapped LNG with Japanese utilities, including Osaka Gas Co., Japan's second-biggest gas distributor, and Japan's largest power producer, Tokyo Electric Power Co. (TEPCO).

The swap deal is part of KOGAS's efforts to secure up to 10 extra cargoes on a spot contract basis ahead of winter.

The Korean gas monopoly typically buys more than 30 spot LNG cargoes a year to meet winter demand, when South Korea consumes about 70 percent of its natural gas.

KOGAS imports a total of 22.2 million tonnes of LNG a year, or 370 cargoes. (*)