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South Korea’s Kogas has struck a deal with BP for the supply of 1.58 million tons of U.S. liquefied natural gas annually over a period of 15 years, starting in 2025, Reuters reports, citing a statement from the South Korean energy ministry.
The gas will come from the Freeport LNG plant or from Calcasieu Pass, the ministry said, adding the deal also included a three-year extension option that could bring its total value to $9.61 billion.
Freeport LNG is slated to have a nameplate export capacity of 13.9 million tons of LNG eventually, and the start of commercial production was scheduled for this September. If the facility begins operating ahead of schedule it will be a rare occurrence in an industry ridden with delays and cost overruns.
The company has so far sealed long-term offtake deals with Osaka Gas, Chubu Electric, BP, Total, and SK E&S. The first two deals re for 2.2 million tons annually each, while the deal with BP will see the supermajor lift 4.4 million tons of LNG from Freeport’s second train, to be commissioned next year. Total and South Korea’s SK E&S will divide between themselves another 4.4 million tons, to be produced from train 3.
Calcasieu Pass, with a capacity of 10 million tons of LNG annually, is yet to begin construction after in August Venture Global LNG announced the final investment decision on the project. Investments so far have totalled $7.1 billion, of which $1.3 billion in equity financing from Stonepeak Infrastructure Partners and $5.8 billion in debt from a group of international banks.
Venture Global LNG already has long-term offtake agreements with Shell, BP, Edison, Galp, Repsol, and Polish PGNiG.
The United States has been growing as an LNG exporter in the last couple of years and is already South Korea’s third-largest supplier. The Asian country, for its part, is the biggest buyer of U.S. LNG.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.