* KOGAS says also made 20-year LNG supply deal with Santos
* Santos says cannot confirm deal, says in "advanced talks"
By Rebekah Kebede
SEOUL/PERTH, Dec 16 State-run Korea Gas Corp
(KOGAS) will buy a 15 percent stake in Australia's Gladstone
LNG project on Friday and agree on a long-term supply deal,
the South Korean government said, paving the way for a final
investment decision on the $15 billion project.
In a complex transaction, KOGAS will buy 7.5
percent each from Australia Santos , the project's
operator, and Malaysia's Petronas, the government said in a
statement on Thursday.
In addition, Santos will also sell an additional 7.5
percent stake in the 7.2 million tonne-per-year Gladstone to
France's Total to cut its stake to 30 percent, just
ahead of the 27.5 percent to be held by both Petronas and Total.
"This deal is the first long-term import contract with
Australia. We expect this to help diversifying supplying lines
from Middle East and southeast Asian countries, and secure
stable supplies," the Korean government said in a statement.
KOGAS will also import 3.5 million tonnes of liquefied
natural gas (LNG) per year from Gladstone for 20 years
starting in 2015.
South Korea, the world's second biggest LNG buyer after
Japan, could initially cover about 11 percent of its annual
LNG consumption from the deal.
Santos would not confirm the deal and said while it was in
advanced talks with KOGAS, it had not reached a definitive
Its shares closed up 2.9 percent at A$12.97.
The company has been widely expected to give a final
approval to the project this week ahead of the Christmas
holidays, but needed the KOGAS deal before a final go ahead.
FIRING UP AUSTRALIA LNG
The finalization of the Gladstone project would be a major
step in kick-starting the coal seam gas industry in
Australia's eastern Queensland state.
Santos' decision to move ahead with GLNG would follow BG
Group's decision in November to approve another coal seam
gas-fed LNG export project in the same region.
GLNG and BG's Queensland Curtis LNG are expected to
produce a combined 15.7 million tonnes per annum (mtpa) of
liquefied natural gas, or equivalent to nearly 90 percent of
current Australian LNG exports.
Two additional coal seam gas projects, an Origin Energy
and ConocoPhillips joint-venture and a Shell (RDSa.L)
project, are expected to come online in Queensland between
2014 and 2017.
Australia has about $200 billion worth of LNG projects on
the drawing board, and the industry estimates Australia will
become the second-largest LNG exporter by 2020.
LNG production is likely to touch at least 60 million mtpa
by that year, as producers scramble to meet demand from growth
in Asian economies like China and India.
South Korea currently has mid-term import contracts with
Australia signed in 2003 and is currently importing 500,000
tonnes per year from the country.
(Reporting by Cho Mee-young in Seoul and Rebekah Kebede in
Perth; Editing by Manash Goswami)