S.Korea cosies up to Oman to get steady supply of LNG

The Sultanate of Oman has signed an MOU with Korea to build a joint facility for LNG to handle fluctutations in Seoul.

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By  Jyotsna Ravishankar Published  July 4, 2006

South Korea and Oman have signed a memorandum of understanding (MOU) in Seoul to build a joint holding facility for liquefied natural gas (LNG) to counter sudden fluctuations in supply and demand. The MOU, founded on a South Korea-Oman energy resources co-operation agreement reached in November 2005, calls for the two countries to build and operate the gas tanks near the production site, said a statement from the Korean ministry. Last year, South Korea imported a total of 22.3 million tonnes of LNG, of which 28% were from Qatar and 25% from Indonesia, the energy ministry said. Oman supplied 19.4%. Kogas, the world’s single-largest LNG buyer, said last month it would invest 855.4 billion won (US $892.1 million) by 2011 to boost its LNG storage and regassification capacity. The expansion is part of its efforts to meet steady growth in demand and cope better with any supply disruptions, the domestic gas monopoly said. Kogas plans to build six 200,000 kilolitre storage tanks, with a combined capacity equivalent to 27% of its current capacity, and three regassification plants that are able to handle 600 tonnes per hour, the company said. “Details have to be worked out about when the facilities will be built, and the size and level of cost sharing, but it is likely that the tanks will be built in Oman,” a Kogas official said. He has said building the tanks near the production site reduces costs and avoids opposition to LNG holding facilities from local residents. South Korea has a long-term strategy to almost double its LNG storage capacity by 2017 to meet rising demand for the super-cooled natural gas. The fuel, which is transported via Oman’s growing tanker fleet, is regassified for distribution through pipelines. The two countries will have the first working-level meeting next month to discuss the feasibility of the project, with construction of the facility expected to start next year.

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