Korea Gas Corp. (036460.SE), the world's largest corporate importer of liquefied natural gas, may sell part of its 20% stake in a Canadian natural-gas project as part of efforts to reorganize its finances, its chief executive said Tuesday.
Korea Gas Corp. (036460.SE), the world's largest corporate importer of
liquefied natural gas, may sell part of its 20% stake in a Canadian natural-gas
project as part of efforts to reorganize its finances, its chief executive said
Tuesday.
The move comes in the wake of South Korean government demands that state-run
energy companies improve their financial standing by selling unprofitable,
noncore overseas assets, and follows an announcement by Kogas in February that
it is looking for buyers for part of its share of an Australia LNG venture.
South Korea
's
state energy giants have taken on massive debt over the past five years as part
of their quest to acquire overseas resources to bolster the country's energy
security. Now, despite a heavy reliance on imports of fossil fuels and plans to
trim dependency on nuclear energy, the Korean government is looking to sell
some of these assets.
"Reducing our debt levels is always on my mind and we're taking a series
of restructuring measures," Chief Executive Jang Seok-hyo told reporters.
The chief executive didn't say how much of the stake it might sell in the LNG
Canada project, a joint venture comprising Shell Canada Ltd., Kogas, Mitsubishi
Corp. (8058.TO) and PetroChina Co. (601857.SH, PTR) that is proposing to build
and operate a liquefied-natural-gas export terminal in
Kitimat
,
British
Columbia
.
The final amount to be sold hasn't been decided yet but reducing the Kogas
stake to 10%-15% of the project could be reasonable, Mr. Jang said, adding that
the company is aiming to work out a concrete plan for the sale by early 2014.
At least six projects to export LNG from
Canada
to
markets in
Asia
are being planned, although
none has yet taken final investment decisions. Large-scale projects like these,
which can cost tens of billions of dollars, often see changes in equity
structure during the planning stage.
"As part of our efforts to improve financial standing at our company,
we're going to trim some stakes in our overseas assets, but the timing is not
quite right for that," Mr. Jang said, citing so-far-fruitless efforts to
sell part of its 15% stake in
Australia
's
Gladstone LNG project.
"It seems energy players are waiting for gas prices to fall further so
that they can buy gas-developing projects at a bargain. We might have missed
good opportunities to sell our assets," he said.
Kogas said in February it has chosen Samsung Securities Co. (016360.SE) and
Rothschild to advise on and sell two-thirds of its share in the US$18.5 billion
GLNG project, which the Korean company acquired in late 2010 for 665 million
Australian dollars (US$688 million).
Mr. Jang said Tuesday the plan is to sell a 5% stake in GLNG to a local company
and another 5% to a foreign company.
He also said Kogas is seeking to expand joint purchases of LNG with Japanese
companies as well as local private companies to help lower buying prices in the
Asian market.
"
Japan
is a
big LNG buyer. I don't think we need to compete against each other, which would
only push up prices," said the Kogas executive. "By joining hands, we
could be mutually beneficial."
Earlier this month, the Japanese and Indian governments announced plans to set
up a multilateral gas-buyers group to push for lower gas prices.
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