BP assures Posco LNG supplies to Korea will start in July
BP assures Posco LNG supplies to Korea will start in July
Bloomberg Seoul
BP Plc. assured South Korea's largest steelmaker, Posco, that liquefied natural gas shipments will start in July, two years before BP completes the Indonesian plant that won the US$2 billion LNG supply contract, Posco said.
Posco will receive one 60,000 metric-ton cargo a month from BP and partners in Tangguh, the Indonesian venture that's due to start output in 2008, said Lee Byeong Ha, an assistant manager at Posco's LNG team. Posco received a test shipment, a cargo that originated in Oman, from BP on May 27.
Posco's LNG imports for its own use will end state-run Korea Gas Corp.'s monopoly on supplies of the fuel in Korea. The Pohang, South Korea-based steelmaker agreed in July to buy 550,000 tons of LNG a year for 20 years from Tangguh.
"BP said it will ensure the delivery of cargoes to us -- we aren't worried about it," Lee said in a telephone interview in Seoul on Wednesday.
"Posco and BP will fine-tune deliveries of the fuel this month."
Niko Kanter, a vice president for BP's Indonesian unit, said he couldn't comment.
BP will supply LNG from its other LNG plants or buy it from other suppliers until Tangguh begins production, Lee said.
Posco is building a 1.7 million ton-a-year LNG-receiving terminal in Gwangyang, south of Seoul. The company plans to spend 280 billion won ($279 million) over three years to expand its capacity by 3 million tons a year.
Posco, which has two gas-fired power plants to supply its steel mills, agreed to buy 50 percent of Korea Independent Energy Corp., South Korea's biggest private power producer, for 291.5 billion won on May 23 to expand its energy business.
Korea Independent operates a 1,800-megawatt power plant in Incheon, west of Seoul.
BP, Europe's largest oil company, agreed in August to sell about $2 billion of LNG over 20 years to K-Power Co., a unit of SK Corp., Korea's largest oil refiner.
K-Power will buy 600,000 tons a year of the fuel starting in 2006 from BP's Tangguh project, SK Corp. said on Aug. 31. K-Power has an option to buy an additional 200,000 tons a year of LNG from Indonesia until 2010, it said.