LNG Sale to Korea
“World Oil” reports that while Cheniere Energy has already shipped eight cargoes of LNG (Liquefied Natural Gas) from its Sabine Pass, Louisiana, facility to South Korea, the arrival of the SM Eagle in country early this month will be something special. Previous shipments have been spot sales, but the SM Eagle will be the first delivery of product under a long term contract. As part of a 20 year agreement, Cheniere has agreed to sell 3.5 million tons per year, approximately 5 billion cubic feet of gas per day (bcfpd), to Korea Gas Corp. for a minimum of $548 per annum.
South Korea is second only to Japan in the volume of LNG imported. Last year the peninsular nation imported 34.19 million tons, roughly equivalent to 50 bcfpd. With the election in May of Moon Jae-in, the country can be expected to rely even more heavily on LNG. Moon has promised to move the nation away from coal and nuclear toward natural gas and renewables. He has indicated that South Korea will not build any new coal-fired power generation plants and has already shut down the country’s oldest nuclear reactor. The new supply contract with Korea Gas puts Cheniere, and the U. S., in an excellent position to capitalize on this policy shift.
The Trump administration has recently expressed concern regarding trade imbalances, especially with Asian nations such as China and South Korea. At a signing ceremony last week celebrating the recent agreement, Korea Gas CEO, Lee Seung-Hoon, observed, ”The two countries are undergoing occasional disputes on issues of unbalanced trade and I’m personally so glad to see the bright future on this matter since today’s event can be the beginning of a significant rise in the Korean imports from the United States.”
To read the article in its entirety, please go to http://www.worldoil.com/news/2017/6/26/chenieres-lng-market-share-expands-as-korea-contract-begins .
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