South Korea's state-owned Korea Gas Corp said Friday it had sold 5% of its stake in LNG Canada to Shell as part of efforts to reduce its debts.
"Kogas' subsidiary Kogas Canada LNG Ltd. has transferred 5% of its stake in LNG Canada to Shell as part of a plan submitted to the government to normalize the public company," Kogas said in a regulatory filing to South Korea's Financial Supervisory Service.
"With the stake sale to Shell Canada Energy, a unit of global energy firm Shell, Kogas' stake in LNG Canada has been lowered to 15% from 20%," Kogas added. It did not disclose financial details of the sale.
"Kogas has pushed for selling half its 20% stake at LNG Canada," a Kogas official told Platts, indicating the company could seek to sell another 5%.
Kogas had earlier said it was planning to sell the stake in South Korea's private sector in a bid to keep the country's stake in the project unchanged, and would propose forming a fund with local investors for the stake transfer. "But we were urged to offer the stake first to our partners in LNG Canada. If they were not interested, we could sell the stake to South Korean bidders," the Kogas official said.
Kogas and its partners launched LNG Canada, a project to produce 12 million mt/year of LNG from two trains at Kitimat in the western province of British Columbia, in May 2013.
After the latest transaction, Shell owns 45% of the project, Kogas 15% and PetroChina and Japan's Mitsubishi 20% each. Kogas plans to import 2.4 million mt/year from LNG Canada from as early as 2019.
The company in March finalized its plan to reduce Won 10.5 trillion ($10.2 billion) in debt by 2017 -- which would lower its debt-to-equity ratio to 249% in 2017 from 385% in 2012 -- through asset sales and the reshuffling of its business portfolio. It is part of wider government moves to stabilize debt-ridden public companies.
The plan calls for Kogas to secure Won 683.5 billion through selling assets in three overseas projects; LNG Canada, the Akkas gas field in Iraq and Uzbekistan's downstream compressed natural gas cylinder project.
Kogas told Platts in March it planned to sell half its 20% stake in LNG Canada for Won 305.5 billion, a 47% stake in its wholly owned Akkas gas field, and its entire 19% stake in the Uzbekistan's CNG project for Won 8 billion.
The government, the major stakeholder in Kogas, has been pressuring the company to reduce its debt, which has grown as a result of massive overseas investment in recent years.
The finance ministry has a 26.86% stake in Kogas, state-owned Korea Electric Power Corp. 24.46% and state-run National Pension Service 6.56%. The balance is held by individual investors.
