S.Korea's E1 to import U.S. shale gas LPG to diversify supplies

SEOUL Wed Nov 7, 2012 11:52pm EST

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SEOUL Nov 8 (Reuters) - South Korea's E1 Corp will import 180,000 tonnes of liquefied petroleum gas (LPG) made from U.S. shale gas in 2014 to lower its dependence on suppliers from the Middle East, a company spokesman said.

The transaction will mark the first time the firm has shipped in LPG produced from U.S. shale gas, although South Korea has imported it previously.

The agreement highlights the increasingly important role a U.S. shale boom is playing in the global energy market, providing energy-hungry buyers such as South Korea with an alternative source of supply.

"The import decision was made to reduce our dependence on the Middle East and diversify our suppliers," the spokesman told Reuters by phone on Thursday, noting the Middle East currently accounts for more than 80 percent of the company's LPG imports.

He denied that the step had been taken due to the cloudy outlook for LPG imports from Iran, however.

European Union sanctions on Iran's natural gas have unintentionally brought its exports of LPG to a near halt, industry sources have said.

LPG comes mainly from oil than natural gas, but shippers and insurers are steering clear of Iranian supplies due to uncertainty over the scope of the new EU sanctions, which, along with steps by the U.S., are designed to pressure Tehran over its disputed nuclear programme.

E1's deal with Enterprise Products Operating LLC, a subsidiary of U.S. gas firm Enterprise Products Partners , would amount to 6.7 percent of its total 2011 LPG imports of 2.7 million tonnes, said the spokesman, who declined to be named. Propane and butane are both kinds of LPG.

Pricing has yet to be decided and E1 does not know if it will continue imports of LPG sourced from U.S. shale gas in 2015, he added.

South Korea and Norwegian energy giant Statoil were the main buyers of Iranian LPG until the EU sanctions kicked in.

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