• Natural Gas News

    Kogas Board Approves Coral FLNG

Summary

South Korean Kogas has decided to invest in the Area 4 Coral South floating LNG project in Mozambique. Company’s board on January 18, green lighted an investment in the FLNG project, subject to a final investment decision by all the project partners.

by: Shardul Sharma

Posted in:

Infrastructure, Liquefied Natural Gas (LNG), News By Country, Mozambique, South Korea

Kogas Board Approves Coral FLNG

South Korean Kogas has decided to invest in the Area 4 Coral South floating LNG project in Mozambique. Kogas's board on January 18 green-lighted an investment in the 3.3mn mt/yr (5bn m³/yr) FLNG project, subject to a final investment decision (FID) by all the project partners.

One partner in the venture is understood to have not yet given its board approval to the venture.

If the project goes ahead, Kogas will invest $513mn in the FLNG project through KG Mozambique, its 100%-owned subsidiary, from 2017 to 2022, and guarantee up to $640mn of the project's debt funding. The FLNG facility aims to start commercial operations from 2022 with a target production volume of around 3.4mn metric tons/yr for 25 years.

The information was revealed by Moody's Investors Service in a note published January 19 in which the rating agency stated that Kogas’ credit quality will not be immediately affected the decision. "The investment is of a manageable size and is unlikely to signal an aggressive expansion by Kogas in exploration and production projects overseas," said Mic Kang, a Moody's vice president and senior analyst.

The project is to develop and produce natural gas from Area 4 of the Coral gas field, which is 10% owned by Kogas, after completion of exploration. The remaining stake is owned by Eni East Africa (70%) -- which is in turn held by the operator Eni and China National Petroleum Corporation (CNPC). Portugal's Galp and Mozambique's state ENH; each has 10% of the project and each has given board approval for the investment.

Mozambique's state news agency AIM in November 2016 reported Coral FLNG's overall project cost at $8bn, of which $2.8bn has already been invested by partners during the field's exploration. The $513mn to be invested by Kogas thus represents its 10% share of the amount yet to be invested.

It's understood that CNPC has not yet given its board's approval to the project -- a requirement before the overall FID is reached.

 

Shardul Sharma