Qatar's Ras Laffan Liquefied Natural Gas Co, a joint venture betweenQatar Petroleum and ExxonMobil, signed an agreement Thursday with SouthKorea's state-owned Korea Gas Corp to supply 2 million mt/year of LNG for 20years starting in 2013 as well as incremental volumes between 2012 and 2016.
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The agreement was signed in Doha between Qatari Oil Minister Mohammedal-Sada and Kogas Executive Vice President and CEO Young Sung Park.
The gas will be supplied by Ras Laffan Liquefied Natural Gas Co. III, orRasGas 3, a unit of RasGas that is 70% owned by QP and 30% by ExxonMobil. Itowns mega LNG trains 6 and 7, each with a production capacity of 7.8 millionmt/year.
Rasgas said after that the new long-term sales and purchase agreementcomplements two existing contracts with Kogas for 4.9 million mt/year of LNGsigned in 1995 and for 2.1 mt/year concluded in 2007, bringing total annuallong-term purchases to 9 million mt/year.
"RasGas Co. Ltd announced today that Ras Laffan Liquefied Natural GasCompany, RL3, has entered into a long-term sales and purchase agreement withSouth Korean state-owned energy company Korea Gas Corp," RasGas said in astatement.
"Under the SPA, RL 3 will deliver 2 million mt/year of Qatar LNG for 20years starting in 2013, in addition to incremental medium term volumes from2012-2016," it added.
Sada said after the signing ceremony that Qatar supplied 8.8 millionmt/year of LNG to South Korea last year.
Qatar, an OPEC oil producer, is the world's biggest LNG exporter withcurrent capacity of 77 million mt/year.
The new agreement with Kogas coincides with a visit to Doha by SouthKorean President Lee Myung-Bak, who arrived in Qatar on the second leg of aPersian Gulf tour that has already taken him to Saudi Arabia, South Korea'sbiggest crude oil supplier. He is also due to travel to the UAE.
Seoul, which is under US pressure to lessen its reliance on Iraniancrude oil and fearful of a potential fall in its imports from Iran, is in themarket for alternative supplies from Arab oil producers in the Persian Gulf.
Lee's office Wednesday quoted Saudi Arabia Oil Minister Ali Naimi assaying that the OPEC kingpin "would accept any requests by South Korea'sgovernment or companies for additional crude supplies."
Saudi Arabia was South Korea's largest supplier of crude in 2011,providing 290.65 million barrels or 31.4% of South Korea's total imports of926.76 million barrels. Iran was the country's sixth largest supplier at87.18 million barrels, or 9.4% of South Korea's total imports, after Kuwait,Qatar, Iraq and the UAE.
Sada later signed a memorandum of understanding with South KoreanKnowledge Economy Minister Hong Suk-Woo to explore expanded cooperationbetween the two countries in the fields of energy and natural resources andindustry.
Sada said in response to a question that the agreement was not relatedto recent developments involving Iran.
"Our cooperation does not come as a response to any events," he said,adding that RasGas was already the biggest supplier of LNG to Kogas.
Abu Dhabi, next stop on the South Korean leader's itinerary, has alreadypledged additional supplies to Seoul in the event of a crisis.
In addition to securing new sources of oil supply, Seoul has beensuccessful in securing upstream acreage in the UAE, long the preserve of themultinationals. It also outbid its Western rivals in both the UAE and SaudiArabia for nuclear power projects.
The leaders of Asia's major economic powers, including Japan and China,have all visited Saudi Arabia and other oil producers in the Middle East,which accounts for three quarters of all Asian oil imports, in a bid tosecure guarantees of additional supply in the event of a shortfall from Iran.
Iran, OPEC's second biggest oil exporter, has come under a stringent setof international sanctions since the start of the year over the unresolvednuclear row with the Western community and is now counting down to a July 1EU ban on imports into the European Union.
Washington, which has imposed sanctions against Iran's Central Bank, isseeking to prevent Tehran from finding alternative buyers in Asia by makingit harder for Asian refiners to pay for Iranian oil imports.
It has also been engaged in a diplomatic effort in tandem with a tightersanctions regime, to convince the biggest buyers of Iranian crude oil in Asiato lessen their reliance on Iranian oil as part of a coordinated bid with theEU and other allies to force Tehran to the negotiating table.
The US and its allies suspect that the Islamic Republic is engaged in acovert atomic weapons program, a charge that Tehran has denied repeatedly,insisting its program is peaceful and designed to generate electricity.
Saudi Arabia, with output capacity of 12.5 million b/d, is seen as amonga handful of producers with enough spare capacity -- currently estimated ataround 2.7 million b/d -- to make up for any shortfall in the market.