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.