Kogas could be next in line for US gas deal

Attention is shifting to South Korean giant Kogas as the next major player that may be looking to commit to a bet on US gas exports since the ­landmark LNG contract between BG Group and Cheniere Energy.

There are currently a handful of proposals to liquefy US-sourced gas totalling about 80 million tonnes per annum (Mtpa) under consideration, according to energy investment bank Tudor, Pickering, Holt and Company (TPH) but, so far, the BG-Cheniere deal is the only concrete contract.

TPH analysts said they thought that agreement would spur ­further interest.

“At (less than) $6 per thousand cubic feet gas and Brent (greater than) $80 per barrel, clear rationale for more NAM projects,” the bank said in a research note.

“BG’s vote of confidence makes Asian utility buyers more likely to follow suit at Cheniere’s facility (e.g. Kogas reportedly in talks with Cheniere).”

Upstream understands that some officials from Kogas toured the Cheniere facility shortly before it announced the BG contract.

The possibility of US-sourced LNG hitting the global market took a major step forward when UK gas giant BG Group signed a 20-year deal with Cheniere ­Energy for 3.5 Mtpa of LNG from Cheniere’s Sabine Pass facility.

Cheniere expects to begin construction on the first phase of the project — two trains with a capacity of 9 Mtpa — in 2012.

The deal also increases the likelihood that BG will follow through with plans to add liquefaction to its Lake Charles import facility, TPH said, and that other proposals, including those in Oregon, would be built. The US LNG trade will be helped by the planned ­expansion of the Panama Canal to be able to handle the largest LNG cargo ships.

Jose Arango, international market specialist with the Panama Canal Authority, said on the sidelines of a conference in Houston that his group had received strong interest from LNG shippers looking for a shorter route to Asia.

E&P expert Daniel Yergin said it only made sense that ­export proposals would crop up given the sustained low prices for gas in the US. “We have an oversupplied ­market for natural gas, and markets seek solutions,” Yergin said during a speech in Houston. But he cautioned that he did not see the US becoming an export superpower.

“My only guess is that we are not going to be a large exporter of LNG, but it will be part of the balance of the marketplace,” he said.

Despite increased momentum for US LNG exports and a sizeable position in unconventional gas plays, ExxonMobil has no plans to export gas from its Golden Pass LNG import facility on the US Gulf Coast.

A spokesman for ExxonMobil said that the company was open to the possibility of US gas ­exports, but it was not contemplating a conversion of Golden Pass to add liquefaction as has been planned for similar facilities at Freeport, Texas and Sabine Pass and Lake Charles, Louisiana.

“I can tell you, though, that Golden Pass is an LNG-receiving terminal, and there are no current plans to change that either into any form of an export terminal,” spokesman David Rosenthal told investors.


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