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.