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Korea inks deal for Australian gas
SEOUL, South Korea (Reuters) -- State-run Korea Gas Corp. (Kogas) said on Thursday it plans to buy 500,000 tons a year of liquefied natural gas (LNG) from Australia's North West Shelf. Kogas said it planned to initial a seven-year deal on Friday with the Australian venture operated by Woodside Petroleum. "We are to exchange letters of intent for the mid-term LNG supply deal with North West Shelf on Friday for the supply of 500,000 tons a year" over seven years, a Kogas official in Seoul said. Kogas president Kim Myung-kyu is in Australia for the deal. South Korea is the world's second largest LNG importer after Japan. Only spot gas beforePreviously Kogas has only bought spot LNG cargoes from North West Shelf. Woodside confirmed North West Shelf was in talks with Kogas, but a spokesman refused to say whether a deal was imminent. Kogas signed a spot deal for 220,000 tons of gas from the North West Shelf last November. (Full story) The two sides said at the time that they hoped it would lead to other plans. Kogas has been seeking an extra two million tons of term LNG to meet growing demand in South Korea which partly stems from power firms using more LNG than alternative fuel oil. The company already has long-term supply contracts for a total of 16.9 million tons of LNG a year with Indonesia, Malaysia, Oman, Brunei and Qatar, but demand is forecast at 18.3 million tons this year. The Kogas official said the company had been in talks with other suppliers for the remaining 1.5 million tons of extra LNG needs, but he declined to elaborate. South Korean LNG demand is expected to reach about 20 million tons in 2005, according to official data. Six cargoes so farThe North West Shelf has supplied Kogas with around six spot cargoes of LNG since 1989 and the joint venture has always made it clear that it would like a term supply contract. Other shareholders in the North West Shelf are units of Royal Dutch/Shell, BP Plc, Chevron Texaco and Japan Australian LNG. The North West Shelf currently supplies 70 percent of Western Australia state's domestic gas demand and about 10 percent of Japanese LNG demand. The joint venture also recently won a A$25 billion contract to supply three million tons of gas annually over 25 years from 2005/06 to China's first LNG terminal. Shares in Woodside are down one percent at A$12.18 in morning trade on Thursday, while shares in North West Shelf venture partner BHP Billiton are down 1.3 percent at A$9.75. Kogas shares are up 3.8 percent at 23,150 won ($19.79), outperforming the broader benchmark stock index, which is down 0.25 percent.
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