SK-Posco likely to pick Tangguh as LNG supplier: Report

South Korean steel maker Posco and SK Corp. are likely to pick BP-operated Tangguh LNG project to win a 20-year contract to supply LNG to South Korean companies, beating a rival bid by Malaysia? LNG Tiga, Bloomberg quoted people familiar with the negotiation.

Posco, South Korea's biggest steelmaker, and SK Corp., its largest oil refiner, chose BP's $2.2 billion Tangguh project in the Indonesian province of Papua as the preferred supplier of about 1.15 million tons of LNG a year for two decades, said the people, who asked not to be identified.

BP is short of customers for the 7 million ton-a-year plant it plans to build in Indonesia as rivals such as Malaysia, Australia and Russia chase the same buyers. BP last year won a contract for 2.6 million tons a year to a planned LNG terminal in China.

Indonesian upstream oil and gas authority BP Migas, when contacted by Petromindo.Com on Friday said that thus far, BP Migas had nor received notification about the matter.

?We have heard gossips, but no formal notification. All I know is the announcement could be made any time now,? said Eddy Purwanto, BP Migas senior official in charge of LNG marketing.

Posco and SK Corp. still need to complete some details of the agreement with BP before a final contract can be signed, Bloomberg reported.

Posco, the world's fourth-largest steelmaker by production, would buy about 550,000 tons annually, while SK Corp. would buy about 600,000 tons a year, one of the people said.

Posco is spending $290 million to build a terminal in Korea able to return about 1.7 million tons a year of LNG to gas form. Posco plans to share the terminal that's scheduled for completion in March 2005 with SK Corp., which will buy the fuel through its unit SK Power Co. (*)