South Korea Purchases Interest in Canadian Gas

A deal announced in March would see Korea Gas Corp. investing $1.1 billion over the next five years to help develop gas on land owned by Calgary-based EnCana Corp.

The site could produce a trillion cubic feet of gas, estimates EnCana—a quantity that could meet nearly a year’s worth of demand from South Korea. With the arrangement Korea Gas will gain a 50 percent interest in a portion of EnCana’s holdings in the Montney and Horn River plays.

Korean companies have previously invested in Canadian refining operations and oil sands but this arrangement would represent the first Korean investment in Canadian gas.

A proposed LNG export facility at Kitimat, B.C. would make Canada a natural supplier to Asian nations. Korea Gas was an early supporter of that project, signing an MOU with developer Kitimat LNG to purchase 40 percent of the proposed plant’s 700 million cubic feet of daily capacity.

Korea Gas is the world’s largest buyer of LNG. These arrangements would enable it to become both an importer and an exporter.

Because Asian gas prices are tied to oil, LNG commands higher prices in Asia than it does elsewhere, though the cost of transporting the fuel to those markets is also significant.

Return to April 2010 Western Energy News

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