Following recent Korea Gas investment in Blue Energy, looks like they are scouting for LNG facilities in Gladstone. Shows confidence in BUL.
Full story - http://business.smh.com.au/business/santos-in-korean-talks-on-lng-deal-20090609-c27z.html
"Santos in Korean talks on LNG deal Clancy Yeates in Kuala Lumpur June 10, 2009 . SANTOS is in talks with Korean buyers about the sale of gas and an equity stake in its Gladstone liquefied natural gas project, a sign that the most sought-after customers are willing to buy LNG sourced from coal-seam gas.
The executive vice president of the resources division at Korea Gas Corporation, Seokhyo Jang, said yesterday the company was in the "initial stage" of sales negotiations with Santos, and they had also discussed taking an equity stake in the project. Santos has said it will reduce its interest in the project from 60 per cent to 51 per cent.
"We were just talking about Gladstone LNG, and taking equity, but still Santos are reluctant to offer any equity to us," Mr Jang said on the sidelines of the Asia Oil and Gas Conference.
Securing a long-term buyer is essential for the project to go ahead, one of four rivals trying to export unconventional coal-seam gas from Queensland.
Last year Santos sold a 40 per cent stake to Malaysia's Petronas for $US2.5 billion ($3.1 billion), but the slump in energy prices has raised concerns about retaining buyer interest.
The chief executive of Santos, David Knox, repeated comments that negotiations were making "good progress" but would not discuss possible buyers.
Britain's BG Group was the first of the Queensland rivals to secure a customer for LNG from coal-seam gas when it signed China's CNOOC, but Japanese and Korean "foundation" buyers are regarded as the most reliable customers.
Korea is the second-largest export market, after Japan, but sceptics say such buyers would reject coal-seam gas-fed LNG because of its lower heating value. But Mr Jang said Korea could slightly reduce a regulatory limit on energy content of LNG imports to accommodate coal-seam gas.
In an earlier discussion the region's biggest buyers and sellers of gas locked horns over the contentious question of how LNG prices are set.
Alongside the fall in iron ore and coal prices, gas buyers are pushing for changes to the lucrative long-term supply contracts that are linked to oil prices.
Mr Jang conceded the need for stable supplies, but questioned the need to pay an "Asian premium" because the balance of power was shifting to the buyers.
In contrast, executives from the oil and gas giants ExxonMobil, Chevron, Petronas and Qatargas talked up long-term Asian demand, which is expected to double by 2030."
BUL Price at posting:
21.0¢ Sentiment: Buy Disclosure: Held
