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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