Korea Gas Corp. to buy Australian LNG until 2016

Korea Gas Corp., the world’s biggest buyer of liquefied natural gas, agreed to extend a contract to buy the fuel from Australia’s North West Shelf venture until 2016.
Under the agreement, Korea Gas, based in Seongnam, will buy as much as 0.5 million metric tons a year of LNG for seven years starting in April 2009, Woodside Petroleum Ltd., the venture operator, said yesterday in a statement. It includes an option for sales to increase by 240,000 tons a year between 2010 and 2015, Korea Gas said in a separate filing.
The $15 billion North West Shelf venture, Australia’s biggest LNG producer, is expanding production by adding a fifth processing unit in Western Australia. It has been extending contracts with existing customers and Woodside Chief Executive Officer Don Voelte said in November the prices of some LNG sales contracts will jump by 15-20 percent starting in 2009.
The new agreement “amends and extends” Korea Gas’s existing seven-year contract for 0.5 million tons a year of LNG from Australia, which was due to end in March 2010, Woodside said in the statement to the Australian Stock Exchange. The agreement was originally due to be announced last month.
The venture can’t comment on the pricing of the new contract, said Peter Kermode, a North West Shelf spokesman in Perth.
Korea paid an average of $397 a ton for its LNG imports in 2005, while Australia’s exports were priced at $240 a ton on average, the Australian Bureau of Agricultural and Resource Economics said in a report last month.
Korea Gas, known as Kogas, plans to import 25.4 million tons of LNG this year, the company said yesterday. Australia was Korea’s fifth-biggest LNG supplier in 2005, after Qatar, Indonesia, Malaysia and Oman, supplying 3.8 percent of its demand, according to BP Plc’s 2006 Statistical Review of World Energy.
“Kogas has been a major customer of the North West Shelf venture since 2003,’’ Peter Cleary, president of North West Shelf Australia LNT Pty, the venture’s marketing arm, said in an e-mailed statement. The venture will be responsible for shipping the fuel.