Regional LNG: KOGAS to form LNG carrier consortium: Report

Korea Gas Corp. (KOGAS), the world's top buyer of liquefied natural gas, said on Wednesday it was in talks with four local shipping firms to set up an LNG carrier consortium in a bid to cut transport costs.

Under the plan, state-run KOGAS would lead the consortium with a 28 percent stake, with the remainder divided between Hanjin Shipping , Hyundai Merchant Marine Co. and SK Shipping and Korea Line Corp.

KOGAS already uses the 4 shipping firms as transport channels.

"We've been in discussions since the start of the second half of the year in a bid to reduce costs and secure a stable shipping network," a KOGAS spokesman told Reuters by telephone.

"But it's not a done deal."

A more detailed picture on the proposed consortium was expected by the end of the month, said the KOGAS spokesman, adding that a memorandum of understanding with the consortium partners and government approval were both pending.

A spokesman for Hyundai Merchant Marine said KOGAS had initiated the talks and that Hyundai welcomed the proposal as it could help secure steady earnings over the long term.

"The consortium would be a win-win situation for all parties involved," said the Hyundai spokesman. "Although there may be initial marginal losses with the lack of price competition among the shippers."

Profits reaped by KOGAS through the proposed consortium would depend on the quantity of its contracts based on free on board agreement, which require the seller to deliver shipments via a vessel designated by the buyer.

South Korea is the world's second-largest LNG importer after Japan. (*)