Shell in talks over Korea LNG power plant

24 June 2002 – Royal Dutch/Shell Group is reported to be in talks with a South Korean conglomerate over the possible construction of a liquefied natural gas power plant in South Korea.

The report in the JoongAng Ilbo cites Shell Chairman Philip Watts. Watts didn’t reveal the name of the possible South Korean partner. The two companies are examining issues involving constructing and managing the power plant, he was quoted as saying.

Separately, Shell has been looking into buying a 15 per cent stake in Korea Gas Corp. or Kogas, which the South Korean government plans to sell as part of privatization plan. Shell visited South Korea last week and met Kogas Chief Executive Kim Myung-Kyu. The maximum stake available to Shell would be 15 per cent for which it would be expected to pay up to $430m.

Recent comments by Kim Dong-won, deputy minister for energy and resources policy at the Ministry of Commerce, Industry and Energy indicate that the privatization process may be delayed. “Our plan was to separate the wholesale and import sectors of Kogas by the end of this year, but that needs laws to be passed. But since the national assembly is not convening, we believe the legislation might be delayed. Accordingly our plan to separate this will also be postponed, until the first half of next year,” he said.

The National Assembly has been effectively frozen since May, with the suspension exacerbated by June 13 local elections that left the opposition with a majority. Presidential elections at the end of the year are also adding to the inactivity.

Korea has drafted an ambitious privatisation plan for its power sector, which it believes will take ten years to complete. Opportunities yielded by the sales have already caught the eye of international oil and gas majors. ChevronTexaco, Exxon-Mobil, Royal Dutch/Shell and BP have all signalled interest.

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