South Korea plans to import $90bn of natural gas from Russia via North Korea to reduce its reliance on more expensive cargoes arriving by sea, according to a report from the Bloomberg news agency.
State-run Korea Gas Corp. has signed a preliminary agreement with OAO Gazprom, Russia’s largest energy company, to import up to 10 billion cubic meters of natural gas over 30 years starting in 2015, the Ministry of Knowledge Economy said in a statement.
Gazprom CEO Alexei Miller said after discussions, that the exact delivery route hasn’t been determined and that shipments could begin as early as 2015.
The attempt to secure North Korea’s consent to build a pipeline on its territory comes as six-nation talks aimed at disarming the country’s nuclear capabilities have stalled.
South Korea will seek guaranteed Russian gas supplies, whether the fuel is delivered via pipeline or otherwise, said Lee Jae Hoon, Vice Minister for Trade and Energy.
The $90bn estimate for the gas contract is based on current prices, which it’s thought Russia and South Korea are likely to renegotiate every year.
North Korea could earn $100m per year from the gas-pipeline project, the Ministry of Knowledge Economy said.