South Korea in $90 billion deal for Russian natural gas

Thu, 16 October 2008

SOUTH KOREA PLANS to import $90bn (at current prices) of gas from Russia via North Korea, with which it shares one of the world’s most heavily fortified borders, to reduce its reliance on more expensive cargoes arriving by sea. The state-run Korea Gas Co signed a preliminary agreement with Gazprom to import 10bn cum/yr of gas over 30 years starting in 2015, the Ministry of Knowledge Economy said in a news release. The accord was signed in Moscow during President Lee Myung Bak’s recent three-day visit.

Gazprom's CEO Alexei Miller said after the talks between President's Lee and Dmitry Medvedev that the exact delivery route hasn't been determined, but that shipments could begin as early as 2015. The attempt to secure North Korea's consent to build a pipeline on its territory comes as six-nation talks aimed at disarming the country's nuclear capabilities have stalled. South Korea will seek guaranteed Russian gas supplies, whether the fuel is delivered via pipeline or otherwise, according to Mr Lee Jae Hoon, vice minister for trade and energy. "Russia suggested a pipeline via North Korea, which is expected to be more economical than other possible routes," the minister said in a news briefing. "Russia will contact the North to discuss this."