SINGAPORE (Dow Jones)--Korea Gas Corp. (036460.SE), or Kogas, the world's largest liquefied natural gas buyer, will sign a memorandum of understanding with the Omani government later Monday on a joint LNG storage deal, South Korea's commerce ministry said.
Under the agreement, the state-run gas monopoly will build and operate LNG storage tanks in Oman, the ministry said in a statement.
It didn't state the duration of the pact.
This would be the first joint LNG storage deal for South Korea, which has already been co-storing crude oil on its own soil with companies from Norway, Algeria and China.
The South Korean government is actively looking to jointly store LNG with exporters to bolster stability of supply during winter, when gas demand peaks, and to cope with a tightening global LNG market as demand rises, the ministry said.
"When demand in winter increases sharply, we can bring in the supply secured in the storage facilities with priority," it said.
Oman is South Korea's fourth-largest LNG supplier, after Qatar, Indonesia and Malaysia.
The South Korean government expects domestic gas consumption to expand in the coming years while demand for costlier oil ebbs. By 2017, gas use is expected to have increased more than 25% from 2005 levels.
South Korea, which imports about 98% of its natural gas needs, currently uses gas to fuel about 7% of its power plants.
Kogas said in May that it will spend KRW855.4 billion ($904.9 million) over the next five years to expand its LNG storage and regassification capacity to coincide with the uptrend in gas consumption.
-By Jun Yang, Dow Jones Newswires; 65-6415-4064; jun.yang@dowjones.com
(END) Dow Jones Newswires
06-26-06 0144ET
Copyright Zawya Dow Jones Newswires 2006
