South Korea has secured 2027 term contracts for 23.5 million mt or 62.3% of the 37.7 million mt it expects to need that year, state-run Korea Gas Corp. said Thursday.
The country has secured 34 million mt for 2015, above the 33.9 million it needs for the year,
according to a Kogas report submitted to the National Assembly.
Kogas, which has a monopoly on domestic natural gas sales, expects South Korea's 2015 LNG consumption to be 34 million mt, down from an earlier outlook of 39.8 million due to weak power demand on relatively higher prices of LNG and rising nuclear power output.
Kogas said its revised forecast was made on the basis on sluggish January-July domestic sales, which fell 8.8% year on year.
Kogas planned to import 33.84 million mt in 2015, down 7.4% from 36.33 million mt imported in 2014, given weaker demand.
"Short-term LNG shortage will be made up by short-term contracts to cover winter demand and spot purchasing if necessary, while long-term shortage would be partly filled by volumes from overseas projects in which Kogas is involved," the report said.
Kogas imported 18.35 million mt of LNG over January-July, including 13.08 million mt or 71.3% from the Middle East and South Asia.
It bought 7.32 million mt or 39.9% of its January-July imports from Qatar and 2.45 million mt or 13.4% from Oman, the report said.
It imported 1.87 million mt from Malaysia, 1.44 million mt from Indonesia, 1.15 million mt from Russia and 790,000 mt from Australia in January-July. The other 3.33 million mt came from 10 minor suppliers, including Nigeria, Equatorial Guinea and Brunei.
Of Kogas' total January-July imports, 15.11 million mt or 82.3% came under long- and mid-term contracts, 2.16 million mt or 11.8% was imported under short-term contracts, and 1.08 million mt or 5.9% came from spot buying.
"Under its plans for long- and mid-term contracts, Kogas is seeking more volumes from Australia and North America so as to ease the dependence on Middle East and South Asian nations," the report said.
"In particular, Kogas is pushing to bring in more volumes from projects in which Kogas holds stakes, such as LNG Canada."
Kogas and its partners launched LNG Canada, a project to produce 12 million mt/year of LNG from two trains at Kitimat in the western province of British Columbia in May 2013.
Kogas currently holds a 15% interest in Shell-led LNG Canada after selling a 5% stake to Shell in May last year as part of efforts to reduce its debt.
"Kogas is still pushing to sell additional 5%, which will reduce its stake to 10%," a company official said.
Kogas pushed for sell the 5% stake by the end of 2014 but failed amid the slump in energy prices in the second half of last year.
Kogas, which imported 0.93 million mt from projects in which it holds stakes in 2014, aims to increase the volume to 2.42 million mt in 2017.
The company currently has 15 contracts covering 24.12 million-31.44 million mt/year in imports for 2015-2019.
The deals include 4.92 million mt/year from Qatari RasGas, 2.1 million mt/year from RasGas II and 1.5 million-2 million mt/year from RasGas III, 4.06 million mt/year from Oman's OLNG, and 2 million mt/year from Yemen's YLNG, among others.
Kogas plans to import 2.8 million mt/year from the Sabine Pass terminal in Louisiana from 2017
. It originally planned to buy 3.5 million mt/year from Sabine Pass, but Kogas signed a deal with Total in January 2014 to resell 700,000 mt/year in a bid to reduce import volumes to South Korea.
Under the deal, Kogas will take 2.8 million mt/year while Total will get the remaining 700,000 mt/year. Kogas also has three mid-term contracts in which Kogas imports 2.73 million-3.88 million mt/year for 2015-2016, the report said.
Besides Kogas, two more South Korean firms are importing LNG directly from overseas sources. Posco, the country's top steelmaker, has been importing 550,000 mt/year from the BP-led Tangguh LNG consortium in Indonesia since July 2005 under a 20-year contract. SK E&S, the country's top city gas provider and an affiliate of the country's top oil refiner SK Innovation, also has been importing 600,000 mt/year of LNG directly from Tangguh since 2005 under a 20-year contract.http://www.platts.com/latest-news/natural-gas/seoul/s-korea-secures-235-mil-mt-in-2027-lng-term-deals-27868046