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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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LNG Giant Looking To Get In On U.S. Shale

LNG vessel

The liquefied natural gas (LNG) sector is seeing a lot of activity. Spurred by prices in the key Japanese market hitting a two-year high in recent weeks, averaging $8.40/MMBtu for January.

That resurgence has prompted several high-profile players to enter the space. Including Thailand’s PTTEP, which said this week it is prepping for a major move into LNG trading, storage and sales.

And elsewhere, the world’s second-largest LNG buyer — Korea Gas Corp. (KOGAS) — is going one step further. Saying that it wants to directly buy into natural gas projects that supply the global LNG industry.

KOGAS chief executive officer Lee Seung-hoon told a conference in Seoul Thursday that his company is “interested” in participating in U.S. shale gas projects — recognizing the ever-growing role shale is playing in supplying LNG exports.

“Securing U.S. shale gas is crucial because it’s an important resource,” Lee told attendees.

That interest is coming as KOGAS is expecting its first cargos of LNG supplied from U.S. shale to arrive this summer — under a 20-year offtake deal struck by the company with Cheniere Energy for shipments from the Gulf Coast. Related: Nigeria Rescues Oil Tanker From High-Seas Pirates

Such supply deals have given KOGAS a toe in the water for shale. But direct buy-in to producing projects would be a much bigger step for the firm, and could represent a new source of project funding emerging for shale E&Ps across the U.S.

The move makes sense given that some of Korea’s competitors for gas supplies have been making similar moves into shale projects. With Japanese conglomerates like Mitsui having operated in plays like the Marcellus for several years now.

If this big jump does happen for KOGAS, it would make the market for shale projects even tighter. Watch for any announcements from the company on specific project acquisitions, and for more M&A activity driven by the ever-growing global LNG sector.

By Dave Forest

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