KOGAS to import LNG worth $9.6 bil. from US

Korea Gas Corp. (KOGAS) President Chae Hee-bong, right, and BP Global Head of M&A Robert Lawson, left, after signing the LNG purchase deal during a ceremony in New York, Monday (local time). At center is the Minister of Trade, Industry and Energy Sung Yun-mo. Courtesy of KOGAS

By Nam Hyun-woo

Korea Gas Corp. (KOGAS) will import 1.58 million tons of liquefied natural gas (LNG) annually from the U.S. for up to 18 years from 2025, after signing a deal with BP, the state-run gas corporation said Tuesday.

KOGAS President Chae Hee-bong, BP Global Head of M&A Robert Lawson and Freeport LNG President Sig Cornelius held a signing ceremony for the agreement in New York. The Minister of Trade, Industry and Energy Sung Yun-mo also attended.

BP will provide 1.58 million tons of LNG for 15 years from 2025. Depending on BP, the deal can be extended for three years. In this case, its total value is estimated at $9.61 billion.

The deal volume accounts for 5 percent of the total volume used in Korea per year and 34 percent of Korea's total LNG imports from the U.S. last year.

The deal is KOGAS's first long-term agreement since 2012 and is expected to play a significant role in the stable supply of LNG into Korea. KOGAS has been relying heavily on a limited number of countries, mostly Middle Eastern nations.

Since 2017, KOGAS has been importing 2.8 million tons of LNG from the U.S. a year, after signing a 20-year deal with the Sabine Pass LNG Terminal.

Following the new agreement, the total volume of LNG shipped from the U.S. to Korea annually will rise to 4.38 million tons from 2025. This will raise American LNG's share of Korea's total LNG imports to 22.8 percent, compared with 10.8 percent last year.

KOGAS said the price it will pay BP is at 70 percent of KOGAS's existing LNG supply deals.

“The deal will stabilize the domestic supply of LNG and lower the consumer price of natural gas,” Chae said. “Also, it will lower the risk of the LNG price going up along with high oil prices.”

BP has liquefaction contracts with U.S. LNG terminals including Freeport LNG and Calcasieu Pass LNG and is able to provide 6.4 million tons of American LNG a year.