Korea Gas eyes US shale plays, targets LNG project


SEOUL -- Korea Gas Corp. is eyeing shale-gas assets in the US and expects to invest in a liquefied natural gas project there that will enable it to import at least another 3 million metric tons a year of LNG, a company executive said.

The state-run gas developer and supplier, known as Kogas, "will actively seek opportunities to buy good [shale-gas] assets' and will open its first US-based office in Houston by next month, Park Young-sung, executive vice president of the Resources Business Division, told Dow Jones Newswires in a weekend interview.

Kogas also plans to invest an estimated $1 billion in Royal Dutch Shell's Prelude LNG project and at least $2 billion in the Gladstone LNG project, both in Australia, Mr. Park said.

Each project is expected to provide the company with around 3.5 million tpy of LNG, he added.

Kogas owns a 15% stake in the Gladstone project and has agreed to take a 10% stake in Prelude.

The South Korean government is eager to acquire overseas oil and gas assets and diversify its energy sources.

It said in December that state-run companies, primarily Korea National Oil Corp. and Kogas, would invest $7.8 billion in oil and gas assets in 2012 to strengthen energy security.

Kogas, already one of the world's biggest LNG importers, agreed in January to buy around 3.5 million tpy of LNG from a subsidiary of US-based Cheniere Energy Partners for 20 years starting in 2017.

Its LNG imports from Australia are expected to soar in coming years, from around 500,000 tpy now to 7 million tpy from around 2016, likely making Australia one of South Korea's top LNG suppliers.

Kogas has no specific plans drawn up or decisions made for divesting a part of its 15% stake in the Gladstone LNG project in Australia, Mr. Park said.

While the company has been reviewing the possibility of selling a part of the stake to other investors - to reduce its relatively high debt-to-equity ratio - no progress has been made so far.

"There's no set timeframe" for the potential stake sale and even if Kogas decides to divest a part of its stake, it won't affect its plans to import around 3.5 million tons of LNG from the project, Park said.

In February last year, Kogas said during a conference call that it may sell around 10% in the Gladstone project to Korean or Japanese companies.

Papua New Guinea remains another potential source of LNG. Mr. Park confirmed that Kogas has formed a consortium with Japan's Mitsui & Co. and Japan Petroleum Exploration Co. to bid together as strategic partners in InterOil Corp.'s proposed multi-billion-dollar Gulf LNG project.

Dow Jones Newswires

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