Korea Gas picks five potential suppliers for $23b LNG contract

Korea Gas picks five potential suppliers for $23b LNG contract

Nam In-soo, Bloomberg, Seoul

Korea Gas Corp., the world's largest importer of liquefied natural gas (LNG), selected five potential suppliers for part of a contract to supply the company with about US$23 billion of the fuel.

State-run Korea Gas picked the five from bidders, including Royal Dutch/Shell Group's Malaysian venture, BP Plc's Tangguh project in Indonesia and ChevronTexaco Corp.'s Gorgon venture in Australia, said Oh Seung-hwan, a manager at Korea Gas's LNG purchasing team.

He declined to identify the five.

"We are going to have serious talks with the five with a view to choosing the final two or three," Oh said in a telephone interview in Seoul. "We aim to sign initial agreements with the successful two or three by the end of November."

State-run Korea Gas wants to buy as much as six million tons a year of LNG over 20 to 25 years starting in 2008, from more than one supplier. The contract will replace an accord with Indonesia's PT Arun NGL that ends in November 2007 and help Korea Gas meet demand for LNG that is expected to rise 5 percent a year over the next 10 years, BP Plc estimated in June.

Korea Gas in August invited bids from 12 gas projects in nine countries, including all seven existing suppliers, Oh said. The bidders included Royal Dutch/Shell's gas project off the coast of Russia's Sakhalin Island, Total SA's gas project in Yemen, Woodside Petroleum Ltd.-operated North West Shelf venture in Australia and Exxon Mobil Corp.'s Qatari project, Oh said.