S. Korea cancels gas deals with RI

S. Korea cancels gas deals with RI

NICOSIA (Reuters): South Korea's economic crisis has forced Korea Gas Corp (KOGAS) to cancel gas supply deals from the United Arab Emirates and Indonesia, the Middle East Economic Survey (MEES) newsletter reported yesterday.

KOGAS earlier this year signed a letter of intent with the Gulf state's Abu Dhabi Gas Liquefaction Company (ADGAS) for the delivery of some 2.3 million tons of UAE liquefied natural gas (LNG) over the next three years.

"The speed of the cancellation took virtually everyone by surprise...KOGAS is now having to make deep cuts in its annual delivery program next year in order to offset a sharp reduction in expected (LNG) demand," MEES reported.

The economic downturn had also prompted South Korea's Ministry of Trade, Industry and Energy to delay the release of its LNG demand forecast until March or April next year while it took stock of the economy and its impact on gas demand.

The forecast was expected to be released this month.

KOGAS -- which is 85 percent owned by the Korean government -- was looking at cutting over 30 cargoes or 1.7 million tons of LNG from its import program for 1998 because of the expected downturn in economic growth, MEES reported.

"Now the financial crisis has spread to South Korea, leaving the Abu Dhabi deal and another much smaller Indonesian sale as casualties in its wake," the newsletter reported.

KOGAS had also canceled a short-term contract with Indonesian oil firm Pertamina for eight LNG cargoes which were due to be delivered next year, MEES reported.

Long-term supply deals lined up with other Gulf Arab states Qatar and Oman and other suppliers in Indonesia, Malaysia and Brunei were unlikely to be affected by the economic situation, the Cyprus-based MEES reported.

The Petroleum Authority of Thailand in October suspended a fully negotiated sales and purchase LNG contract from Oman following its currency and stock market crisis.