Regional LNG: Kogas may invest in Mexico LNG project: Report
Friday, March 26 2004 - 02:31 AM WIB
``We are going to advance into the U.S. market and are in talks with Sempra,'' said Korea Gas Chief Executive Oh Kang Hyun. Korea Gas and Sempra, the biggest U.S. gas distributor, may also jointly buy LNG for import to the U.S., said Lee Heung Bok, an official at Korea Gas's overseas business team.
Korea Gas has imported LNG for two decades and may help manage San Diego-based Sempra's planned terminal near Ensenada in western Mexico, which may be the first on North America's west coast. The U.S. is forecast to quadruple purchases of the fuel by 2010 in an effort to avoid shortages.
Korea Gas wants to expand overseas after the government ended its monopoly on LNG imports in South Korea.
Sempra also plans to build a terminal near Lake Charles on the Gulf of Mexico, in Louisiana, and this week said it may announce within two months where it will buy the gas.
South Korea's biggest steelmaker, Posco, and largest oil refiner, SK Corp., in August signed an agreement to buy 23 million tons of LNG from BP Plc's Tangguh venture in Indonesia over two decades to become Korea Gas's first local rivals in LNG imports.
``We signed a memorandum of understanding with Sempra last year about broad cooperation in the LNG business,'' Korea Gas's Lee said in an interview. ``As part of the business tie-up, Korea Gas may buy a stake in the project to build terminals in Mexico.''
Sempra may seek joint LNG imports, using Korea Gas's 17 LNG tankers chartered from Korean shipping companies, Lee said. Korea Gas may seek to swap LNG cargoes with Sempra for shipment to Mexico during the northern hemisphere summer when South Korean demand wanes, he said.
Stephen Baum, Sempra chief executive, and Donald Felsinger, president of Sempra's non-utility businesses, visited Korea Gas more than a year ago to discuss potential opportunities, Felsinger said in an interview this week.
The talks focused on ``the opportunities, since they're basically a winter-peaking country, to do some type of commercial sharing of gas that would be cost-effective for them,'' Felsinger said. They also included discussions about Korea Gas's expertise in operating import terminals, he said.
Korean demand for gas peaks during the northern winter and Californian demand peaks during the northern summer, offering the opportunity for joint purchases, Baum said in an interview. Baum and Felsinger wouldn't give more details.
In December, Sempra signed an initial agreement to buy all its gas supplies for its proposed Mexican terminal from Tangguh.(*)