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| Title | [Reuters] RPT-INTERVIEW-S.Korea's Daesung Expands into China's Gas Market | 2005.10.12 |
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FROM: By Park Sung-woo SEOUL (Reuters) - South Korean gas network giant Daesung Group is investing in a city-gas distribution business in China, joining a growing list of foreign firms tapping the country's fledgling retail gas market, its chief said on Tuesday. Daesung has made a preliminary deal with Singapore's City Gas and a major Chinese oil firm to supply gas in Qingdao, in Shandong province, making it the first Korean firm to venture into China's retail gas business, Chairman Kim Young-hoon, told Reuters in an interview. "The market is huge, but they don't have much knowledge in this sector, so they need us," said the 53-year-old Kim, who has a Masters in theology from Harvard University and an MBA from the University of Michigan. The three-party consortium plans to supply 164 million cubic meters of gas via pipelines to about 50,000 households in Qingdao from 2007, said Hanna Shin, a spokeswoman for Daesung. Shin said they expected the consortium partners to seal a final contract by the end of this year. The consortium is considering building a 500,000-tonliquefied natural gas (LNG) storage facility and is also talking with several LNG suppliers in Australia, including Woodside Petroleum Ltd., to import LNG into the eastern Chinese city, Shin said. Kim said the Chinese partner would source for gas initially from northeastern China. He declined to name the Chinese firm. Both Kim and Shin declined to give the value of the project. Daesung's three city gas companies, which include Daegu City Gas and Seoul City Gas, take up a quarter of the South Korean capital's gas market. Another affiliate, Daesung Industrial Co. Ltd. has stakes in upstream oil or gas projects in countries such as Vietnam, Yemen and Qatar. PIPELINE DREAMS City Gas is a wholly owned subsidiary of Singapore investment company Temasek Holdings [TEM.UL] and is the main supplier of town gas, to public housing and private condominiums in the island-state. China, which is actively promoting LNG to diversity away from dirty coal while meeting double-digit demand growth for electricity, wants to expand the proportion of energy it gets from gas to 8 percent by 2010 from 3 percent now. Big names already in China's gas sector include Russia's Gazprom, Italy's Enel and Hong Kong's Hutchison Whampoa. Late last year, India's largest gas transporter GAIL (India) Ltd. said it was in talks to buy a stake in China Gas Holdings Ltd. Daesung's Kim also said he hoped a proposed $10 billion project to build an undersea pipeline from an Indonesian gas field to Shanghai would help ease China's thirst for the clean fuel and cut down on import costs of LNG -- a super-cooled, compressed natural gas -- to Northeast Asia. "China has inexhaustible appetite for energy and oil prices are rising, so we believe the project is feasible," said Kim, who is also chairman of non-profit group Partners for Equitable Growth (PEG), which is leading the pipeline project. The ambitious 4,875 km (3,027-mile) pipeline project spanning across Vietnam, Malaysia and Thailand, was endorsed in 1998 by the Asia-Pacific Economic Cooperation (APEC) forum, which groups 21 Pacific-rim economies, but has made little progress as Beijing has yet to approve the plan. The source of the gas on D-Alpha block in the Natuna Sea has estimated recoverable reserves of 46 trillion cubic feet and the majority owner and operator is Exxon Mobil Corp. |
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