South Korea set to sign $84B in Australian LNG agreements

By Phaedra Friend Troy

Australia will soon sign enormous liquefied natural gas (LNG) deals with South Korean state utility Korea Gas Corporation, according to a report from local source The Australian.

The government of South Korea has approved two Australian LNG deals worth $84 billion to import 5 million metric tonnes of LNG a year over the next 20-plus years. The contracts with Shell (NYSE: RDS.A) (NYSE: RDS.B) and Total (NYSE:TOT) are set to be signed next month, The Australian report contends.

Korea Gas has signed an agreement to purchase 3.64 metric tons of LNG a year for the next 26 years from Shell’s Prelude FLNG project in Western Australia.

The first Floating LNG project to be sanctioned in the world, Prelude was discovered in 2007, and initial LNG production is scheduled for 2016.

Additionally, the state utility will purchase 2 million tons of LNG a year from Total’s Ichthys LNG project in Western Australia, as well as other natural gas developments in Nigeria, Norway and Egypt. This LNG supply agreement is set to last 18 years.

Earlier this summer, the Australian government gave environmental approval for the Ichthys LNG project in the offshore Browse Basin. Japanese firm Inpex serves as the operator of the Ichthys LNG project, and Total holds 24 percent working interest.

South Korea’s Ministry of Knowledge and Economy has reported the LNG shipments are worth $84 billion and are equal to 17 percent of Korea’s gas consumption in 2010.

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