Ras Laffan Liquefied Natural Gas Co., one of two Qatari producers of the fuel, will boost LNG supplies to Korea Gas Corp. by 2 million metric tons a year under a 20-year agreement.
Deliveries under the agreement are set to begin in 2013, the Qatari company known as RasGas said in a statement distributed at the signing ceremony today in Doha, the capital of the Persian Gulf state. The volumes will increase total LNG dedicated to Kogas, as the Asian company is known, under long-term agreements to 9 million tons, it said.
Qatar, the world’s largest exporter of LNG, has diverted LNG supplies to Asia that were originally intended for North America, where rising supplies of gas from shale rock is limiting the need for imports, Qatar’s Energy Minister Mohammed Saleh Al Sada said last March. RasGas signed an agreement to send 1.5 million tons of LNG to Taiwan’s CPC Corp in December.
Under today’s agreement, RasGas will also ship additional “incremental” volumes of LNG to Kogas from 2012 to 2016.
“The price is quite good,” Ibrahim Ibrahim, economic adviser to the country’s emir, said at the signing, where the sale price wasn’t disclosed. “It’s way different from the prices in other markets because the market in the Far East, as you know, the gap is huge between the Far East and Europe and, of course, if you put in the States, it’s even bigger.”
Qatar tries to sell its LNG at a price that is equal to oil on an energy equivalent basis, Ibrahim said.
“Oil parity, we said, is something we want to achieve,” he said. “We have achieved it once or twice but we are working for it.”
RasGas signed its first long-term agreement with Kogas in 1995, supplying 4.9 million tons a year, according to the statement. A second agreement in 2007 increased volumes to South Korea by 2.1 million tons a year.
Qatar has production capacity of 77 million tons annually. LNG is gas chilled until it reaches liquid form so that it can be transported by ship over distances not covered by pipeline.