Korea Gas Corporation Has Stepped up Efforts to Sell Part of Its Stake

Korea Gas Corporation, the world's single-largest buyer of LNG, has stepped up efforts to sell part of its stake in Australia's Gladstone LNG project, a company official told Platts Friday. 

The South Korean state-owned company has selected South Korea's Samsung Securities and French investment bank Rothschild as advisers to look into the possible sale, said the official who declined to be named. 

"On behalf of Kogas, they will look into the proposed sale of the stake. We would decide whether to sell the stake on the basis of the investigation," said the official, adding that feasibility study is expected to be concluded by the end of April. 

The renewed effort to sell part of its stake comes two years after the company was first said to be considering such a deal, and comes as Kogas looks to increase its LNG imports to meet growing domestic demand. 

In February 2011, Platts reported citing a Kogas official that the company was looking at possibly selling a 10% stake in the Gladstone project, out of the 15% interest it owns, in a bid to cover its rising LNG import costs. At the time, Kogas said it was looking to sell the stake to South Korean or Japanese companies. 

Explaining the apparent lack of progress since then, the official said Friday: "It took time for Kogas to have discussions with related government agencies and state-run stake holders over the proposed equity sale." This included the finance and energy ministries, he said. 

In December 2010, Kogas paid $607.8 million for a 15% stake in the Santos-led Gladstone project, after agreeing to import 3.5 million mt/year of the plant's output for 20 years beginning 2015. The Gladstone LNG project is now held by operator Australia's Santos (30%), Malaysia's state-owned Petronas (27.5%), Total (27.5%) and Kogas (15%). 

South Korea's LNG consumption has been increasing in recent years due to an economic recovery and higher demand for power generation due to unusual temperature cycles -- lower than usual in winter, higher than usual in summer. 

Kogas has said it plans to import 37.895 million mt of LNG in 2013, up 6.5% from last year's estimated imports of 35.6 million mt. The company, which has a monopoly on natural gas sales in the country, plans to sell 37.855 million mt of LNG this year, up 3.6% from last year's 36.548 million mt.