Monday, September 29, 2008
Seoul signs up for Russia gas
29 September, 2008 - Upstream OnLine - South Korea has signed a $90 billion deal with Russia to receive 10 billion cubic metres of natural gas per year for 30 years via a pipeline that runs across North Korea, Seoul's Energy Ministry said. The deal, signed between state-run players Korea Gas Corporation (Kogas) and Russia's Gazprom will give South Korea the access to Russian gas from 2015, the ministry said in a statement. Earlier in the day, a Kremlin official said that the two countries were to sign the deal to supply Siberian gas to Seoul. The deal was announced to coincide with South Korean President Lee Myung-bak's state visit to Russia. Russia first pledged to supply gas to South Korea at the start of this decade but the project to build a pipeline to China and subsequently to South Korea has been repeatedly delayed. The delays came as Gazprom struggled to gain control over some of the biggest Siberian deposits to ensure it has enough resources to fill the link. The project is also complicated by the fact that the gas would have to be supplied either via the territory of North Korea or by a more expensive subsea route. The Asian pipeline project is gaining momentum as Russia seeks to expand into Asian energy markets and warns the European Union, which has difficult political relations with Moscow, that it should be prepared to face tougher competition for energy resources. Gazprom has managed to gain control over vast resources in East Siberia over the past year without paying a single rouble. The state has transferred deposits to the world's largest gas producer without holding auctions. The company, which already supplies a quarter of Europe's gas needs, said it hopes to reach a gas pricing deal with China next year to start gas deliveries in 2013-2014.