S Korea bags support from LNG suppliers on contract split: Report

South Korea's government has secured cooperation from Indonesia, Malaysia and Brunei on its plan to split up and distribute the current liquefied natural gas contracts of Korea Gas Corp., or Kogas, to three companies as part of efforts to restructure the country's gas industry, a government official told Dow Jones Newswires Thursday.

In the minutes of a meeting signed by officials from Malaysia LNG Sdn. Bhd. and Kogas, MLNG said it will "cooperate and support Kogas in implementing the government's plan to deregulate and restructure Korea's gas industry," said the official, from the Ministry of Commerce, Industry and Energy.

Officials from Indonesia and Brunei also signed similar letters with Kogas during visits by South Korean gas industry officials to the three countries, he added.

South Korea will continue to discuss further details with these LNG supplying countries, the official said.

Previously, these LNG supplying countries and others had objected to South Korea's plan to divide state-run Kogas' LNG supply contracts, requesting a guarantee from a credible body, such as Kogas or the government, to ensure stable LNG purchases after Kogas' import operations are sold to private companies.

Indonesia, Malaysia and Brunei didn't request a guarantee this time but asked South Korea to select credible companies when privatizing Kogas and to provide them with initial rights to use LNG facilities, the official said.

South Korean officials will leave for Oman and Qatar Friday to seek their cooperation on the plan to split up the LNG contracts, the official said.

As part of the restructuring of the country's gas industry, the government plans to split Kogas' import and wholesale operations into three entities and then sell two of the three companies to the private sector by the end of 2002 through an auction.

Kogas plans to divide current LNG contracts among the three import and wholesale companies to be established.

Kogas will retain ownership of the remaining company, which the government plans to sell at a later date after monitoring gas supply stability and other market conditions.

Kogas has long-term contracts with Indonesia, Malaysia, Qatar, Oman and Brunei to import a total of 16.98 million metric tons of LNG a year.

The earliest contract due to expire is one with Indonesia, in November 2007. The latest are with Qatar and Oman. Both expire December 2024.(*)