Business Times (Malaysia): Shell attributes contract success to Petronas (ShellNews.net) 23 Feb 05

Feb 23, 2005

THE Royal Dutch/Shell group has attributed its success of clinching a deal to supply liquefied natural gas (LNG) to South Korea to Petroliam Nasional Bhd's (Petronas) continuous efforts to seek markets for the commodity.

"The success of MLNG Tiga in emerging as one of the winners is due to the marketing efforts of Petronas rather than Shell as they are the operator of MLNG Tiga," its unit in Malaysia said in a statement to Business Times.

The company said this in response to a statement last week, announcing that MLNG Tiga, together with two other international suppliers, have clinched a US$20 billion (US$1 = RM3.80) LNG contract to Korea Gas Corp for a 20-year period beginning 2008.

The MLNG Tiga project involves Petronas, Shell, Mitsubishi Corp, the Sarawak State Government, Nippon Oil LNG and Diamond Gas.

MLNG Tiga's portion of the US$20 billion contract will be the supply of 1.5 million tonnes per year, or 30 per cent of Korea Gas' requirement of some five million tonnes of LNG per year.

Apart from MLNG Tiga, the other two suppliers of the LNG to South Korea are Yemen LNG Co and Sakhalin Energy Investment Co of Russia. The Royal Dutch/Shell group has investments in the latter.

On the value of the contract, Shell maintained that it would not disclose the value for commercial reasons.

"Shell did not mention the commercial value of the LNG contract nor list any details pertaining to how MLNG Tiga secured the contract in its press release," the company said.

However, on February 16, South Korea's Ministry of Commerce, Industry and Energy indicated in a statement that the price of the LNG would be 35 to 40 per cent cheaper than previous long-term LNG import deals and could save South Korea over US$13 billion over a 20-year period.