BP and Posco to sign pact for $ 1.4 bn gas supply

Jun 28, 2004 02:00 AM

BP, Europe's largest oil company, will sign a $ 1.43 bn contract to supply 11 mm tons of LNG to Posco, South Korea's largest steel maker, over 20 years starting in 2005.
BP and its partners in Indonesia's $ 2.2 bn Tangguh project will sign a final sales agreement with representatives from Posco on the Indonesian island of Bali, Kim Soo Jung, a spokeswoman for the steel maker, said.

Last August, BP and BP Migas, Indonesia's oil and gas regulator, signed a preliminary agreement to supply 550,000 tpy of the fuel to Posco. They also signed a preliminary contract to supply 600,000 tpy to SK, South Korea's largest oil refiner, over 20 years from 2006.
LNG imports by Posco and SK for their own use will end the state-run Korea Gas's monopoly on supplies of the fuel in South Korea. The government is pushing ahead with a plan to reorganize the gas industry to allow other companies to import and sell the fuel in the domestic market.

Indonesia agreed to sell the fuel to Posco and SK at a higher price than to China, Djoko Harsono, head of marketing at BP Migas, said last month in Jakarta. Indonesia had agreed to sell LNG to Fujian Province in China for about $ 2.40 per mm Btu based on a formula linked to oil prices, said Rachmat Sudibyo, head of the regulatory agency, in October 2002. He put the worth of the contract with Posco at $ 1.43 bn last year.
Indonesia wants Badak NGL in Bontang, the world's biggest LNG plant, to supply South Korean buyers the fuel initially because gas will not start flowing from Tangguh until 2007.

Source: Bloomberg News
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