Kogas deal with Yemen LNG “Extremely favorable” to Kogas
MITI:
In 2005, Kogas struck even more competitive deals with its suppliers, MLNG III Tiga, Yemen (YLNG) and Sakhalin II. Although these are long term contracts — all 20 years with an option for a further five — they appear to be extremely favourable, particularly as they were struck at a time when the price of crude oil was rising strongly.
In all three contracts the price of the fuel is less than 30% indexed to the price of crude oil.
In two of the contracts, Kogas is promised 70% winter delivery.
Also in two of the contracts is a price cap and the opportunity to review the price after seven years.
Kogas to own 8.9% of Yemen LNG:
Korea Gas Corp. - Additional dividend revenue expected from 2008. - KITC Full Report - PDF - 2006 年 7 月 19 日
We maintain BUY with the six-month price target of W45,000. The company decided to acquire half (2.9%) of Hyundai Corp?s stake in YLNG (Yemen LNG project). If the acquisition takes place, KOGAS? stake in YLNG would expand to 8.9%. We expect KOGAS to earn dividend revenue from 2008 with the beginning of YLNG?s LNG production of 6.7mn tons per annum in 2008. We believe that KOGAS? acquisition of Hyundai Corp?s YLNG stake shows one of the variety of roles that it can play in overseas resource development. As the government is trying to make overseas resource development a national agenda, we believe the government?s support for KOGAS will expand going forward. In return, the company will widen its role based on strong brand value and bargaining power.
