Reducing Dependence on Middle East

Kogas to diversify gas import sources this year to cut dependence on Middle East countries and dispatch own security forces

President Choo Kang-soo of Korea Gas Corp.(Kogas) has a number of huge objectives to push for Kogas, the importer and explorer of natural gas overseas this year. One of them is to bring down the rate of dependence on gas fields in the Middle East to less than 50 percent of the volume Korea imports from overseas annually by diversifying import sources.
He also would like to have private gas companies join up with Kogas in overseas exploration of gas and form the company's own security team to cope with the turbulent situation in the Middle East and pirates in the sea.
All of the objectives are to free Korea from over dependence on gas and oil from the Middle East where some of the countries are faced with political and social unrest, which could jeopardize their supplies of gas and oil to Korea, putting Korea in a very difficult situation.
President Choo might spend many nights awake as he is too worried about Kogas' activities to keep securing gas supplies overseas stable amid the persisting unrest in the Middle East, which is escalating as the days go by. Choo should know the situation better than any one else in Korea as he has been in the energy exploration business for over 40 years.
Choo in an interview with a local daily said Kogas will set up its own security force to keep its gas fields and transport lanes overseas safe with the instability in the Middle East and Africa growing ever larger and piracy on the sea lanes that jeopardizes the shipping of the energy material on the rise these years.
Most of the Korean firms engaged in energy exploration overseas have been dependent on local security forces for their security entirely, but not any more for Kogas. It will send its own security forces to guard its overseas operation units including ships that transport the energy material. He said the natural resources exploration usually involved investments and technology, but not any more; it also includes security forces from now on.
Fortunately he said Korea has many highly trained veterans of the military, intelligence and police forces who are retired and we have already secured a number of very able people to form our own security forces, Choo said.
In Iraq, where Kogas is engaged in gas and oil exploration, would be the first country most likely to get Kogas' own security forces to guard their energy fields. Kogas got the rights to explore for gas and oil in the Jubair oil field in Iraq last year and was expected to get the delivery of oil in the first half of this year. The state-run energy company also expects to sign with the Iraqi government to secure the rights to explore gas at the Akkas gas field soon. Kogas feels it would need its own security force to guard its operation when it starts exploration of the field.
Choo's plan also includes making Kogas less dependent on Middle East gas, coming to about 65 percent of its total gas imports last year.
With unrest brewing in the region starting with Egypt, Libya, Syria and even Kuwait most recently, Choo is out to cut it less than 50 percent of all of its gas imports by diversifying importing countries. Kogas in January, acquired 20 percent stake in the Umiyak mining district in Inubixi located on the 69th degree north latitude. Choo said, "the gas field in the cold region is for the future, not for an immediate profit in the national interest." The North Pole region is judged to contain 30 percent of gas and 15 percent of oil still untapped energy resources in the world, he said. The region has many possibilities for Korea to enter for oil and gas as it is still untapped, he said, along with chances for construction firms to build pipelines.
Kogas also signed with Midland Oil Co. an agreement to develop Akkas gas field and produce gas at the Iraqi Ministry of Oil in Bagdad, Iraq, on Oct. 13.
Kogas won the right to explore the gas field in a bidding held on Oct. 20, 2010, and on June 1, the company signed a provisional contract for the Akkas gas development and the Iraqi cabinet approved the contract on Sept. 13. On Oct. 13, an official contract was signed with MdOC.
Kogas will share 75 percent of the stake in the gas field and North Oil Co. holds the remaining 25 percent. The contract is for 20 years and can be extended for 5 more years after the expiry.
Kogas is obliged to draw up a preliminary plan to develop the gas field after six months after the contract becomes official and produce 100 MMscf(million standard cubic feet) of gas or 17,000 barrels of oil equivalent in three years after its development plan is approved. Kogas is obliged to produce 400 MMscf of gas or 67,000 barrels of oil equivalent within six years from the date the contract become official.
Kogas secured the rights to develop Akkas gas field under its strategy to boost the self-sufficiency ratio of gas used in Korea. The Iraqi venture is also help Kogas to secure the know-how on operating a gas field, along with technologies.
Gas produced from the gas field is to be supplied to a thermal power plant in Iraq, making contribution to the Iraqi economy.
Akkas gas field is located in Anbar state in western Iraq near the Syrian border and is projected contain 3.3 Tcf (trillion cubic feet) in gas reserves or 590 million barrels of oil equivalent. 1 trillion cubic feet equals 21 million tons of LNG, while 1 MMscf equals 21 tons of LNG.

President Choo Kang-soo of Korea Gas Corp.

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