Regional LNG: Total, partners may bid to supply Yemen LNG to KOGAS: Report
Friday, September 10 2004 - 01:10 AM WIB
Yemen LNG Co., which also includes Hunt Oil Co. and SK Corp., may offer gas from the Marib field, 170 miles (274 kilometers) east of the Yemeni capital Sanaa, Hugues Montmayeur, chairman of Yemen LNG's marketing committee, said Tuesday in an interview in Seoul. The contract may last as long as 25 years.
Total, based in Paris, may compete with rivals such as Royal Dutch/Shell Group's Sakhalin project and Australia's North West Shelf venture to supply Korea Gas, the world's biggest LNG buyer. The contract will replace an existing accord with Indonesia's PT Arun NGL and help Korea Gas meet demand that's expected to rise 5 percent a year over the next decade, according to BP Plc.
``Competition will be pretty tough,'' said Lee Chang Mok, an analyst at Woori Securities Co. in Seoul. ``Long-term contracts are more flexible and thus more attractive than shorter ones, which supply mostly for winter demand.''
Korea Gas, based in Seongnam, South Korea, wants to buy as much as 6 million tons a year of LNG over 20 to 25 years, starting in 2008. It plans to receive supply proposals by Sept. 20 so that it can choose potential suppliers by the end of November and sign an agreement in December.
The state-run utility last month sent invitations to bid to 11 gas projects in nine countries, including existing long-term suppliers in Indonesia, Malaysia, Qatar, Brunei, Oman and Australia.
"We are definitely going to bid for the Korean contract," Montmayeur said on the sidelines of a function held to mark the 20th anniversary of Yemen's Marib oil project. "We have prepared for it for a long time."
Korea Gas wants to pay about $3 per million British thermal units under new contracts, Chief Executive Oh Kang Hyun said in May. It currently pays between $4.50 and $5 per million BTU for LNG from Indonesia. At $3 per million British thermal units, 6 million tons of the fuel over 25 years is worth $23.4 billion.
"Yemen is geographically well located -- we can sell LNG to the U.S. market in summer and to Korean customers in winter, when there's a large heating requirement," Montmayeur said. Yemen LNG is in talks with four U.S. companies for LNG sales, he said. He declined to identify them.
Total has a 43 percent stake in Yemen LNG, which is developing a proven reserve of 10 trillion cubic feet of natural gas at Marib. Yemen Gas Co. owns 23 percent and Dallas-based Hunt Oil has 18 percent. SK Corp., South Korea's largest oil refiner, has 10 percent and Hyundai Corp. has 6 percent.
Korea Gas is seeking more than one supplier under the new contracts that are replacing a 20-year accord with PT Arun expiring in 2007. Exxon Mobil Corp. supplies Arun with gas from fields in northwest Indonesia.
Separately, Korea Gas said last month it's in talks to buy about $1.9 billion of LNG from Shell's Malaysian venture and Exxon Mobil Corp.'s Qatari project. The company wants to import 7.5 million tons of LNG over four years from Malaysia LNG Tiga Sdn. and Qatar's Ras Laffan Liquefied Natural Gas Co. Korea Gas wants the fuel to be delivered from October this year mainly for winter use. (*)