South Korea agrees £51bn LNG deals with oil giants Shell and Total

South Korea is the world’s second-largest buyer of liquefied natural gas (LNG) after Japan, importing over 32 million tonnes in 2010.

State-run Korea Gas Corp will import a combined 5.64 million tonnes per annum (mtpa) of LNG under the deals to be signed next month, the economy ministry said.

South Korea’s largest ever long-term gas supply deals are worth 90 trillion won ($84.1bn) from 2013 to 2035, the ministry said.

KOGAS, the world’s largest corporate buyer of LNG, will also acquire a 10 per cent stake with an additional investment of $1.5bn in Shell’s fully-owned Prelude project in Australia, according to the ministry statement and a ministry official.

Shell will build the world’s largest floating vessel for the Prelude project, a ship longer than four soccer fields and six times heavier than the world’s largest aircraft carrier.

Prelude is expected to become the world’s first floating LNG project when it comes on line in 2017.

The purchase adds to KOGAS’s portfolio of projects in Australia, which is rapidly boosting its LNG export capacity.

KOGAS already has a 15 per cent stake in the Santos-led Gladstone coal seam gas to LNG project in Australia’s eastern state of Queensland.

Asia’s largest economies are competing for Australia’s gas supplies to meet their rapidly rising energy needs.

Japan’s massive March earthquake knocked out nuclear power plants and forced it to rely more on gas-fired power, forcing it to boost LNG imports and tightening fundamentals in the regional and global market. The deals would help “stabilise South Korea’s LNG supplies as global energy supply concerns have been on the rise since Japan’s March earthquake”, the country’s economy ministry said.

Shell and Total will supply LNG mainly from Australia’s Prelude and Ichthys projects under the deals.