Page 14 - AsianOil Week 38

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KOGAS agrees to buy US LNG from BP
PROJECTS & COMPANIES
STATE-OWNED Korea Gas (KOGAS) has struck a deal to buy 1.58mn tonnes per year (tpy) of US LNG from super-major BP. The deal cov- ers a 15-year period starting in 2025, but BP can opt to extend it for a further three years. South Korea’s Ministry of Trade, Industry and Energy estimates that if the deal is extended to cover 18 years, it will be worth $9.61bn.
The LNG will either be delivered from Free- port LNG, which recently entered service, or Calcasieu Pass, which is due to start up in 2022.
South Korea is the third-largest importer of LNG globally and the top importer of US LNG. The country also buys more LNG from Qatar and Australia than it does from the US. KOGAS currently imports 35-40mn tpy.
Imports from the US are on the rise. Customs data show that in the first eight months of 2019, South Korea imported 4.82mn tonnes of LNG from the US, marking a 5.5% increase from 4.57mn tonnes imported during the first eight months of 2018. Imports from the US accounted for 18% of the country’s total LNG imports over the first eight months of this year.
KOGAS has a 20-year supply deal with US LNG exporter Cheniere Energy that started in 2017. The South Korean company currently imports 2.8mn tpy of LNG from Cheniere’s Sabine Pass terminal in Loui- siana, though it is authorised to buy up to 3.5mn tpy under the deal.
KOGAS’ sale and purchase agreement (SPA) with BP is the first long-term con- tract the company has signed since 2012. It comes as South Korea attempts to diver- sify its LNG supply sources beyond the Middle East and South-east Asia, which will lead to it buying more LNG from the US and Russia.
KOGAS is benefiting from low LNG prices, and said the price of the deal was around 70% of its existing contracts.
BP often secures offtake from liquefaction plants with the aim of selling that supply on to other buyers. The super-major previously signed similar end-user agreements with Japan’s Kansai Electric Power Co. (KEPCO) in 2015 and Thai- land’s PTT in 2016.™
OCEANIA
Mitsui moves to sell BassGas stake
FINANCE & INVESTMENT
JAPANESE developer Mitsui & Co. has said it is looking to sell its 40% stake in the BassGas pro- ject off the coast of Australia’s southeastern state of Victoria.
The Beach Energy-operated project, which lies in the shallow waters of the Bass Strait, extracts natural gas from the Yolla field, trans- ports it via a 147km subsea pipeline to shore for processing. The gas is then sold into the East Coast market.
While Credit Suisse estimates Mitsui’s stake could be worth A$360mn ($243.4mn), Reuters cited an unnamed source as pegging its value at only A$140mn ($94.7mn).
Beach owns 53.8% of the project while Prize Petroleum, a unit of India’s state-run Hindu- stan Petroleum Corporation Ltd (HPCL), owns 11.25%. BassGas includes the undeveloped Tre- foil gas project.
Mitsui Australia has engaged Rothschild to advise on the sale.
The Japanese company’s move, announced on September 19, comes just one day after US super-major ExxonMobil revealed that it intended to sell its 50% stake in the mature Gippsland Basin Joint Venture (GBJV) in the Bass Strait.
The project, of which BHP owns the other half, includes 23 offshore facilities that feed into
a network of about 600km of pipelines. BHP’s share of the project’s production in financial year 2018-2019 was 111.9bn cubic feet (3.17bn cubic metres) of gas, 5.19mn barrels of crude and condensate and 5.4mn barrels of oil equivalent of natural gas liquids (NGLs).
While ExxonMobil’s stake could fetch an esti- mated $3bn, analysts and bankers told Reuters that decommissioning costs could weigh on the final price.
The super-major said the sale was part of a wider review of its global assets and that it would be “testing market interest for a number of assets worldwide, including its operated producing assets in Australia.”
Reuters quoted analysts and bankers as say- ing the asset may be of interest to Mitsui and Beach Energy.™
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w w w . N E W S B A S E . c o m Week 38 25•September•2019