KOGAS considers selling stake in Australia LNG project

Reuters

* KOGAS holds 15 pct, did not specify how much it might sell

* Follows KNOC saying it might sell part of Canadiansubsidiary (Adds more details)

By Meeyoung Cho

SEOUL, Sept 26 (Reuters) - State-run Korea Gas Corp is considering selling at least part of its 15percent holding in the $18.5 billion Gladstone LNG (GLNG)project, the South Korean company told the stock exchange in afiling on Thursday.

KOGAS, the world's largest corporate buyer of LNG, did notsay in the filing how much of the stake it might sell.

The announcement comes after South Korea initiated a reviewof its overseas investments in oil and gas due to poorprofitability, particularly those made in the last five years.

Another state-run firm, Korea National Oil Corporation(KNOC), said on Tuesday that it is considering selling "non-coreparts" of its loss-making Canadian energy subsidiary HarvestOperations and also reviewing other overseas assets forpotential sales of some of their parts.

Asia's fourth-largest economy is heavily dependent on energyimports and rapidly expanded overseas investments to develop oiland gas reserves between 2008 and 2012, as it grappled withinflation driven by rising import costs.

But the new government installed this past February has saidit is focused more on quality than quantity of its energyinvestments.

KOGAS bought a stake in GLNG in Australia in 2011 in a bidto boost South Korea's gas supply.

The project, part of a $190 billion surge in new LNGcapacity development under way in Australia, has seen costs risearound 16 percent from its original estimate of $16 billion.

GLNG is set to begin producing gas in 2015. Australia'sSantos owns 30 percent of the project, while Malaysia'sPetronas and Total own 27.5 percent each.

GLNG has an estimated capacity of 7.8 million tonnes perannum and has binding offtake agreements with both Petronas andKOGAS for 3.5 mtpa over 20 years.

Santos said KOGAS's announcement did not come as a surprise.

"We've been aware that that was their intention from thevery beginning," a Santos spokesman told Reuters via phone.

KOGAS last November said it would invest $1.3 billion todevelop the GLNG project in addition to its initial injection ofUS$610 million to buy the GLNG stake in February 2011.

(Reporting by Meeyoung Cho; Additional reporting by RebekahKebede; Editing by Clarence Fernandez and Tom Hogue)

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