Qatar's Ras Laffan Liquefied Natural Gas Co, a joint venture between Qatar Petroleum and ExxonMobil, signed an agreement Thursday with South Korea's state-owned Korea Gas Corp to supply 2 million mt/year of LNG for 20 years starting in 2013 as well as incremental volumes between 2012 and 2016.
The agreement was signed in Doha between Qatari Oil Minister Mohammed al-Sada and Kogas Executive Vice President and CEO Young Sung Park.
The gas will be supplied by Ras Laffan Liquefied Natural Gas Co. III, or RasGas 3, a unit of RasGas that is 70% owned by QP and 30% by ExxonMobil. It owns mega LNG trains 6 and 7, each with a production capacity of 7.8 million mt/year.
Rasgas said after that the new long-term sales and purchase agreement complements two existing contracts with Kogas for 4.9 million mt/year of LNG signed in 1995 and for 2.1 mt/year concluded in 2007, bringing total annual long-term purchases to 9 million mt/year.
"RasGas Co. Ltd announced today that Ras Laffan Liquefied Natural Gas Company, RL3, has entered into a long-term sales and purchase agreement with South Korean state-owned energy company Korea Gas Corp," RasGas said in a statement.
"Under the SPA, RL 3 will deliver 2 million mt/year of Qatar LNG for 20 years starting in 2013, in addition to incremental medium term volumes from 2012-2016," it added.
Sada said after the signing ceremony that Qatar supplied 8.8 million mt/year of LNG to South Korea last year.
Qatar, an OPEC oil producer, is the world's biggest LNG exporter with current capacity of 77 million mt/year.
The new agreement with Kogas coincides with a visit to Doha by South Korean President Lee Myung-Bak, who arrived in Qatar on the second leg of a Persian Gulf tour that has already taken him to Saudi Arabia, South Korea's biggest crude oil supplier. He is also due to travel to the UAE.
Seoul, which is under US pressure to lessen its reliance on Iranian crude oil and fearful of a potential fall in its imports from Iran, is in the market for alternative supplies from Arab oil producers in the Persian Gulf.
Lee's office Wednesday quoted Saudi Arabia Oil Minister Ali Naimi as saying that the OPEC kingpin "would accept any requests by South Korea's government or companies for additional crude supplies."
Saudi Arabia was South Korea's largest supplier of crude in 2011, providing 290.65 million barrels or 31.4% of South Korea's total imports of 926.76 million barrels. Iran was the country's sixth largest supplier at 87.18 million barrels, or 9.4% of South Korea's total imports, after Kuwait, Qatar, Iraq and the UAE.
Sada later signed a memorandum of understanding with South Korean Knowledge Economy Minister Hong Suk-Woo to explore expanded cooperation between the two countries in the fields of energy and natural resources and industry.
Sada said in response to a question that the agreement was not related to recent developments involving Iran.
"Our cooperation does not come as a response to any events," he said, adding that RasGas was already the biggest supplier of LNG to Kogas.
Abu Dhabi, next stop on the South Korean leader's itinerary, has already pledged additional supplies to Seoul in the event of a crisis.
In addition to securing new sources of oil supply, Seoul has been successful in securing upstream acreage in the UAE, long the preserve of the multinationals. It also outbid its Western rivals in both the UAE and Saudi Arabia for nuclear power projects.
The leaders of Asia's major economic powers, including Japan and China, have all visited Saudi Arabia and other oil producers in the Middle East, which accounts for three quarters of all Asian oil imports, in a bid to secure guarantees of additional supply in the event of a shortfall from Iran.
Iran, OPEC's second biggest oil exporter, has come under a stringent set of international sanctions since the start of the year over the unresolved nuclear row with the Western community and is now counting down to a July 1 EU ban on imports into the European Union.
Washington, which has imposed sanctions against Iran's Central Bank, is seeking to prevent Tehran from finding alternative buyers in Asia by making it harder for Asian refiners to pay for Iranian oil imports.
It has also been engaged in a diplomatic effort in tandem with a tighter sanctions regime, to convince the biggest buyers of Iranian crude oil in Asia to lessen their reliance on Iranian oil as part of a coordinated bid with the EU and other allies to force Tehran to the negotiating table.
The US and its allies suspect that the Islamic Republic is engaged in a covert atomic weapons program, a charge that Tehran has denied repeatedly, insisting its program is peaceful and designed to generate electricity.
Saudi Arabia, with output capacity of 12.5 million b/d, is seen as among a handful of producers with enough spare capacity -- currently estimated at around 2.7 million b/d -- to make up for any shortfall in the market.
