Korea Midland Power said Monday that it has struck a $3.4 billion deal with Switzerland's Vitol SA to buy liquefied natural gas under a long-term contract.
Korea
Midland
Power
said Monday that it has struck a $3.4 billion deal with
Switzerland
's
Vitol SA to buy liquefied natural gas under a long-term contract.
The unit of Korea Electric Power Corp. (015760.SE), known as Komipo, will buy
400,000 metric tons of LNG a year from Vitol from 2015 to 2024, it said in a
statement.
The deal marks the first successful attempt by a Kepco unit at buying LNG
directly from suppliers instead of purchasing through the country's LNG
supplier, Korea Gas Corp. (036460.SE).
The
deal with Vitol comes with an option to purchase more than the initially
contracted volume, depending on changes in market prices, Komipo said in the
statement.
It didn't disclose price details but said the deal was signed at a
"relatively competitive price" compared with recent long-term deals
signed with other Asian countries.
As Komipo doesn't have a LNG terminal, it will borrow Posco's (005490.SE) terminal,
a person familiar with the matter told Dow Jones Newswires.
South Korea
has
four LNG terminals in operation, of which Kogas runs three.
From 2001, the government has allowed companies to import LNG for their own
consumption, but Kepco's power generation units, including Komipo, have been
unable to find a supplier.
Local companies other than Kogas are still not allowed to import LNG for
trading purposes.
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