Seoul/Perth: State-run Korea Gas Corp (KOGAS) will buy a 15% stake in Australia’s Gladstone LNG project on Friday and agree on a long-term supply deal, the Korean government said, paving the for a final investment decision on the $15 billion project.
In a complex transaction, KOGAS will buy 7.5% each from Australia Santos , the project’s operator, and Malaysia’s Petronas, the South Korean government said in a statement on Thursday.
In addition, Santos will also sell an additional 7.5% stake in the 7.2 million tonne-per-year Gladstone to France’s Total to cut its stake to 30%, just ahead of the 27.5% to be held by both Petronas and Total.
“This deal is the first long-term import contract with Australia. We expect this to help diversifying supplying lines from Middle East and southeast Asian countries, and secure stable supplies,” the Korean government said in a statement.
KOGAS will also import 3.5 million tonnes of liquefied natural gas (LNG) per year from Gladstone for 20-year starting in 2015.
South Korea, the world’s second biggest LNG buyer after Japan, could initially cover about 11% of its annual LNG consumption from the deal.
Santos would not confirm the deal and said while it was in advanced talks with KOGAS, it had not reached a definitive agreement. Its shares closed up 2.9% at A$12.97.
The company has been widely expected to give final approval for the project this week ahead of the Christmas holidays but needed the KOGAS deal before a final go ahead.
South Korea currently has mid-term import contracts with Australia signed in 2003 is currently importing 500,000 tonnes per year.