South Korea’s state-run gas corporation said Wednesday that it will import 2.8 million tons of liquefied natural gas (LNG) annually from the United States starting in 2017.
The amount to be imported is equal to 10 percent of what the country needs per annum, Korea Gas Corp. (KOGAS) said. It added that bringing in LNG from North America can reduce the country’s dependence on imports from existing suppliers.
Asia’s fourth largest economy is one of the largest consumers of natural gas in the world, with 80 percent of its imports coming from the Middle East.
“Diversifying imports not only makes the country less dependent on existing suppliers, but can make it possible to cut prices,” the corporation said.
KOGAS said that it signed a deal to import the gas with Sabine Pass LNG Terminal in the Gulf of Mexico between Texas and Louisiana. The terminal is owned by Cheniere Energy Inc. based in Houston.
Besides diversification, the decision by Washington to limit LNG exports to countries it has free trade agreements with can give Seoul an edge when it comes to setting strategies related to the import of LNG vis-a-vis rivals such as China, that do not have free trade pacts with the world’s No. 1 economy.
The FTA between South Korea and the United States went into effect as of March 15, 2012.
KOGAS, meanwhile, said that under the agreement it forged with its U.S. partner, it has the option to sell the gas to a third country, in the event that demand for LNG in South Korea drops in the future.
“This arrangement gives greater flexibility to the buyer,” an official for the gas company said. (Yonhap)