Regional LNG: Kogas strives for more LNG supply contracts

State-run Korea Gas Corp (Kogas) is lining up more long-term supply contracts to meet growing demand, Chief Executive Officer Kim Myung-kyu was quoted by Reuters Friday.

As part of the drive to secure more gas, Kim said that Kogas might start talks in the second half of this year to sell up to 10 per cent of the company to a strategic investor in return for a term supply deal.

Robust natural gas sales ?mostly for home heating during winter and for power generation ? are likely to raise the firm's 2003 net profit "slightly above" last year's record of 298.3 billion won ($237.9 million), Kim added.

South Korea is the world's second largest importer of LNG after neighbouring Japan and Kim said he expected sales to grow to 18.2 million tonnes this year from 17.7 million in 2002.

Kim said Kogas would sign a final contract later this month with Malaysia's state oil firm, Petronas, for the supply of two million tonnes of LNG a year for seven years.

This would be the firm's second new term contract this year. A medium-term deal to buy 500,000 tonnes of LNG a year from Australia was clinched earlier in 2003. "The new supply deals will help ease any unexpected LNG shortages during peak winter demand periods," Kim said.

He said Kogas was keen to clinch further term contracts to meet growing demand, which was expected to exceed supply from this year onward. By 2007, the shortfall could reach two to three million tonnes, Kim added.

"We'd like to make term contracts which last about 10 to 15 years in order to give more flexibility to the market," he said. Besides the new deals, Kogas imports 17 million tonnes of LNG every year under 20-year supply contracts with Malaysia, Indonesia, Brunei, Oman and Qatar.(*)