Gas privatization plan on track: Korea

Gas privatization plan on track: Korea

SEOUL (Dow Jones): South Korea's energy ministry said Monday it will split Korea Gas Corp.'s import and wholesale operations into three entities this year and pursue privatization of Kogas as planned.

Two of the three split companies will be sold to the private sector by end-2002 through an auction, and Kogas will retain ownership of the remaining company, said the Ministry of Commerce, Industry and Energy, or Mocie, in a statement.

Mocie said it plans to sell the remaining import and wholesale unit at a later date after watching the supply stability and other market conditions.

Mocie will also formulate a privatization plan for Kogas' liquefied natural gas facilities, receiving terminals and pipelines in the first quarter of 2002, completing the privatization by end-2002.

The necessary legislation for restructuring the gas industry will be submitted to the National Assembly in November, Mocie said.

The specific requirements to acquire the two import and wholesale units will be announced in the first quarter of next year, Mocie said. The energy ministry added the bidders will need management capable of stabilizing gas supply and demand, and the ability to acquire the existing LNG contracts.

In order to split the import and wholesale operations, Mocie will draw up a plan to divide the current LNG contracts, some of them which expire as late as 2024.

The plans for separating LNG contracts will be finalized by November following professional research and consultation, Mocie said. The government will also conduct simulations to test the results of contract division before applying it, Mocie added.

Kogas has long-term contracts with Indonesia, Malaysia, Qatar, Oman and Brunei to import 16.86 million metric tons of LNG a year. The earliest expiring contract is with Indonesia in November 2007; the latest are with Qatar and Oman, which both expire December 2024.