Korea Gas Corp., aka Kogas, is partnering with TotalEnergies under a tentative agreement to develop more liquefied natural gas (LNG) marketing and development opportunities.
Under a memorandum of understanding (MOU), South Korea’s state-run Kogas and the French supermajor could cooperate on improving LNG and low-carbon energy trading to increase price stability for the country.
Kogas CEO Chae Hee-bong said the agreement is the latest “valuable fruit” of the long-term cooperation between the firm and its French partner.
“We will do our best to improve the nation’s energy welfare by focusing on the introduction of competitively priced natural gas and stable supply and demand management by strengthening trading capabilities through the establishment of a strategic partnership relationship,” Chae said.
South Korea has received more U.S. volumes than any other country since U.S. LNG terminals started shipping out large scale cargoes overseas in 2016. South Korea has received about 1.5 Tcf of U.S. natural gas as of April. That’s about 13.6% of all exported U.S. volumes since 2016.
However, U.S. LNG volumes to South Korea have started to drop since last August. The decline accelerated after Russia’s invasion of Ukraine, which increased European demand for LNG cargoes. About 19 Bcf of U.S. LNG went to South Korea in March compared to 32 Bcf during the same time last year, according to the Energy Information Administration.
Kogas is one of the world’s largest buyers of LNG and imports about 90% of all volumes that enter South Korea, according to the U.S. Department of Commerce. It retains a monopoly in the country’s domestic wholesale market and supplies both power generation customers and city gas companies.
Added competition has kept Asian market prices rising alongside the price for gas to Europe. The Japan-Korea Marker (JKM) for LNG to North Asia jumped Thursday to its highest point since March on fears of supply constraints. An extended outage at Freeport LNG, which regularly supplies cargoes to Kogas through its contract with BP plc, and reduced Russian flows to Europe have sparked more supply concerns. The JKM price for gas delivered in August jumped more than $11 Thursday.
Kogas said it expects TotalEnergies would help “actively utilize trading by developing potential projects” as the country’s demand for LNG continues to grow. South Korea’s latest energy plans call for displacing nuclear and coal with LNG to add more than 10 GW of generation by 2030. It also assumes the country’s natural gas demand will grow to around 40.4 Mt/year by 2031.
Kogas is an equity partner in at least three international LNG terminal projects with TotalEnergies. It has a 5% stake in Australia’s Gladstone LNG, a 6% stake in Yemen LNG operated by TotalEnergies and leads a consortium of Korean businesses with a 5% stake in Oman LNG.
Kogas has also been diversifying its LNG sources with long-term contracts. It signed a 20-year, 2 mmty contract with Qatar Petroleum last summer. TotalEnergies recently backed a major LNG project in Qatar, becoming the first equity stake partner in the massive North Field East (NFE) expansion project.
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