S. Korea to import gas from Yemen, Malaysia and Russia

S. Korea to import gas from Yemen, Malaysia and Russia

South Korea will buy US$20 billion of liquefied natural gas (LNG)
from Yemen, Malaysia and Russia over 20 years from 2008,
officials said on Wednesday.

Korea Gas Corp. the world's largest LNG importer, has selected
Yemen LNG, Malaysia LNG and Russia's Sakhalin Energy Investment
as "preferred sellers," the Ministry of Commerce, Industry and
Energy said.

South Korea is the second largest LNG market in the world. The
three companies will supply up to five million tons of LNG
annually from 2008, it said. A formal contract would be signed in
March or April.

The ministry said Korea Gas would import 1.5 million tons from
the Malaysian and Russian companies partly owned by the Royal
Dutch/Shell Group and 1.3 million tonnes from Yemen LNG. The
remainder is an option for the future, it said.

The three firms were among 12 LNG companies or consortiums
from five countries which submitted bids.

The price would be 35-40 percent cheaper than the country's
previous long-term LNG deals and could save South Korea more than
13 billion dollars over the 20 years, the ministry said.

The deal reflects efforts to cut costs and secure a stable
long-term supply of gas, it said.

"The reduction in import prices reflects the change in
international conditions from a sellers' to a buyers' market,
with gas producers competing with each other to win deals," Lee
Won-Gul, deputy minister for energy and resources policy, told
Yonhap news agency.

He said more negotiations would take place on offset
incentives, such as participation in future energy development
and buying of equity holdings in the companies.

South Korea plans to arrange further LNG imports totaling
three million tonnes from 2010, Yonhap said.

Peter de Wit, president of Shell Gas and Power Asia Pacific,
said the tender reflects an overall increase in global demand for
LNG.

"Shell projects have been consistent and reliable suppliers to
customers in Asia -- maintaining supply and honoring commitments
to established customers for more than 30 years," he said.

Shell controls 55 percent of the Sakhalin II project, which is
scheduled to start LNG deliveries in late 2007. -- AFP