S. Korea, Qatar to sign gas deal in June

S. Korea, Qatar to sign gas deal in June

DOHA (Reuter): South Korea, a major buyer of Indonesia's liquefied naturals gas (LNG), will finalize a deal with Doha next month to increase LNG supplies from Qatar to 4.8 million tons a year by the turn of the century, a South Korean official said on Wednesday.

"In February, we signed a memorandum of understanding to lift an additional amount, but a final agreement is yet to be signed," Korea Gas Corporation (Kogas) vice-president Kang Yong-Soo told reporters.

A Kogas delegation would visit Doha in June to "finalize terms for converting the MOU into a formal sales and purchase agreement (SPA)," he said.

Kang heads Kogas' department for LNG purchase and transportation.

Kogas had an option to double the purchase of gas from Doha by another 2.4 million to three million tons annually under a SPA it had signed with Qatar's Ras Laffan LNG Company in 1995.

But it insisted that Qatar remove a clause relating to the "minimum price" it must pay from the "take-or-pay" SPA, and grant a five percent stake to Kogas or its nominees in the project.

In February, Ras Laffan LNG Company, or Rasgas, said it had accepted both demands of Kogas and signed a deal with it to increase the supply to 4.8 million tons annually from the year 2000.

The SPA deal with Kogas is for 25 years with first deliveries in 1999.

"But certain necessary formalities, like changing the text of the original SPA, amending the article of association of Rasgas in Doha and taking the government's approval in Seoul, have to be completed before a final deal is sealed," a Qatari official said.

Rasgas is 66.5 percent owned by Qatar General Petroleum Corporation, 26.5 percent by Mobil Corp [MOB.N], four percent by Japan's Nissho Iwai [8063.T]and three percent by Itochu Corp [8001.T].

Kang, who attended Monday's ceremony to lay the foundation stone of Rasgas, the Gulf Arab state's second LNG plant, said half of South Korea's imports of 18 million tons of LNG a year in the year 2000 would come from the Middle East.

"We are going to take 4.1 million from Oman LNG and 4.8 from Rasgas a year," he said.

"Of the rest, 5.3 million tons will come from Indonesia, two million tons from Malaysia and 700,000 tons from Brunei annually...."

Its supply contracts include long and short-term deals.

Kang said South Korea now consumed 12 million tons of LNG -- two-thirds of which are supplied by Indonesia, Malaysia and Brunei and the rest by short-terms contracts.