POSCO, the world's second largest steel maker, and SK Power - 100 percent owned by SK Corporation (SK Corp), South Korea's largest oil refiner - announced the outcome of bidding for the supply of up to 1.35 million tons per annum of LNG annually, for a 20-year term starting in 2005. The bid process to purchase LNG is the first undertaken by Korea's private sector
POSCO is currently building an LNG terminal at Gwangyang in South Korea that will re-gasify the LNG to be supplied. POSCO has two gas-fired power plants with a total generating capacity of 845MW at their steel mills in Pohang (345MW) and Gwangyang (500MW), while SK will construct a 1080MW power station at Gwangyang.
Ralph Alexander, chief executive of BP's Gas, Power & Renewables business, said: "Korea is an important gas market and with our partners in the Tangguh project we are pleased to have been selected as the preferred supplier to SK and POSCO. We believe an ability to offer highly competitive, flexible LNG to the marketplace is a critical and distinctive feature of our offer. We now look forward to entering detailed negotiations with SK and Posco to reach agreement on supply and purchase contracts over the next few months."
The Tangguh project's bid was chosen in competition with five other international LNG supply sources. The Tangguh Project is targeting a two-train start-up development. The project has already secured an LNG sales contract for 2.6 million tons per annum for the Fujian LNG project in China commencing in 2007.
The Tangguh LNG project is located in the Berau-Bintuni Bay region of Teluk Bintuni Regency, in the Indonesian province of Papua (formerly called Irian Jaya). The project is operated by BP Indonesia, who hold a 37.16% stake in the project, as a PSC contractor to the regulator, BPMIGAS.
BP's partners in the Tangguh Project are MI Berau B.V (held by Mitsubishi Corporation and INPEX Corporation) (16.30%); CNOOC Ltd. (12.50%); Nippon Oil Exploration Berau (12.23%); BG Group (10.73%); KG Companies (held by Japan National Oil Corporation, Kanematsu Corporation and Overseas Petroleum Corporation (10.0%); and LNG Japan Corporation (held by Nissho Iwai Corporation and Sumitomo Corporation) (1.07%).
The Tangguh gas fields contain 14.4 tcf of proved and certified natural gas reserves. The planned LNG processing plant will be able to produce seven million tons of LNG per annum from two initial processing trains.
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