Korea Gas to buy $10 billion worth LNG from Santos

Just a day after the Australian subsidiaries of Chevron signed three binding sale agreements worth $60 billion to supply liquefied natural gas (LNG) to Japan and South Korea from the Gorgon project in Western Australia, Korea Gas, the world's biggest LNG buyer is set to buy $10 billion worth LNG from Australia's Santos.

Korea Gas is also expected to take up to 10 per cent in Santos's planned Gladstone LNG project.

Chevron's $60 billion agreements were for a total supply of nearly 3 million tonnes per annum (MTPA) of LNG to Japan's Osaka Gas and Tokyo Gas, and GS Caltex Corporation of South Korea (See: Chevron inks $60 billion gas deal with Japan and South Korea).

Chevron deal comes only weeks after ExxonMobil, which like Royal Dutch Shell owns 25 per cent of Gorgon, agreed to sell $41 billion worth of Gorgon LNG to PetroChina, at the time hailed as Australia's largest trade deal (See: China signs $41-billion gas deal with ExxonMobil's Australian arm).

Earlier, Santos had expressed its intention to sell a 9 per cent stake in the Gladstone project, which will be fed by Queensland's coal seam gas reserves, leaving Santos with a 51 per cent stake.

According to analysts, the stake sale will relieve Santos from its tight liquidity position, and help the company finance the requirements at Gladstone and the Papua New Guinea LNG without tapping the equity markets.