South Korea has agreed to import natural gas from Russia for 30 years starting in 2015, part of a $102 billion bilateral gas and chemical deal.
State-run Korea Gas Corp., known as Kogas, and Russian state gas company OAO Gazprom signed a memorandum of understanding for Kogas to import 10 billion cubic meters of gas annually for 30 years, the South Korean energy ministry said Monday. That part of the deal is valued at $90 billion, the ministry said.
The gas will be equivalent to about 20% of the country's projected gas demand in 2015. South Korea currently imports most of its natural gas from the Middle East and Southeast Asia.
South Korea plans to construct a gas pipeline connecting Vladivostok, Russia; North Korea and South Korea. If the pipeline plan isn't realized, South Korea will review a plan to import the same amount of natural gas from Vladivostok in liquefied natural gas or compressed natural gas form, the ministry said.
Russia and South Korea haven't discussed pipeline construction with North Korea, said Yoon Young-jin, senior deputy director of the energy ministry's gas division.
As part of the deal, Kogas has proposed that it and Gazprom jointly build a five-million-ton LNG plant and a chemical plant near Vladivostok which can annually produce one million tons of polyethylene and 500,000 tons of polypropylene. The proposal includes jointly running and selling products from the plants. The time frame and details haven't been worked out yet.