Dollar forwarding LNG hedging by Kobama

[Tree]

Well Kobama better do it and do it before Iran shuts down the Straits and Kobama finds hisself hedging LNG contracts based on $170/barrel oil.

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By Min-Jeong Lee
Of DOW JONES NEWSWIRES

SEOUL (Dow Jones)--State-run Korea Gas Corp. (036460.SE), the world's largest corporate buyer of liquefied natural gas, plans to continue to fully hedge its LNG import exposure, worth around $22 billion, by buying dollar forwards this year so it doesn't suffer from foreign exchange fluctuations, an executive at the company said Friday.

The state-run gas developer and supplier, also called Kogas, has a basic policy of hedging all its LNG exposure.

Kogas has a business plan for the year that's based on a foreign exchange rate of KRW1,050 to the dollar and oil prices of US$100 per barrel, Kim Hee-tae, the head of the company's finance department told Dow Jones Newswires in an emailed interview. The dollar was at KRW1,125.80 in late Asian trade Friday.

Kim didn't specify what type of oil price he was referring to. South Korea relies mostly on Dubai crude for domestic demands. Dubai crude was trading around $120 Thursday. Kogas is one of the biggest importers of LNG globally because South Korea relies heavily on overseas resources for its energy needs. As of end-2011, South Korea's oil-and-gas self-sufficiency ratio, which measures the ratio of resources owned by domestic firms to imports, was at 13.7%. For funding its overseas resource development projects, the company will first use corporate funds and sell foreign-currency denominated bonds to raise funds and will borrow in foreign currencies if it has to, he said.

Last month, another Kogas executive said the company plans to invest about $3 billion this year in overseas resources, with investment mostly directed towards LNG projects.

Kogas is mulling sales of various bonds, including global bonds, maple bonds, samurai bonds and Swiss-franc bonds, Kim added.

Analysts expect Kogas to continue to become a more active participant in global bond market as it seeks to expand resource development overseas. In January, Kogas raised around US$750 million from the sale of a 30-year dollar-denominated global bond to finance overseas resource projects.

Key overseas projects Kogas is participating in include the multi-billion Akkas gas field development in Iraq in which it is the major stakeholder and the Gladstone LNG project, in Queensland state. It also said last year it will participate in the Prelude gas development project in Australia through a stake investment.

[Palm]

Anyone know how to whistle in S Korean to get their attention? Someone needs to let them know about our little project.

[Tree]

I do!!

http://www.youtube.com/watch?v=uJud7FXvyXc

[Tree]

I had an epiphany!!.... Jobama and Kobama should lash-up and bid in ennerOles auction. Hey McDuck, what would be a fair dollar forwarded LNG price in forward dollars??

..."In January, Japan's average LNG import price came in at $864.62/mt ($16.63/MMBtu)"

Lookie like we need to whistle in Japanese too!!

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Japan's January LNG imports rise 13.7% to 8.15 million mt
Singapore (Platts)--28Feb2012/627 am EST/1127 GMT

Japan imported 8.15 million mt of LNG in January, up 13.7% on the month and 28.2% on the year, on the back of greater heating requirements during the peak winter demand season, according to customs data released by the Ministry of Finance Monday.

The largest LNG exporter to Japan in January was Malaysia, supplying 1.65 million mt, up 16.2% from a year earlier and 29.2% from December, according to MOF data.

Qatar was second at 1.40 million mt, a marginal 0.2% increase from the previous month and up 68.1% year on year. This was followed by Australia, supplying 1.11 million mt of LNG, down 12.9% month on month and 11.5% year on year.

Japan's most expensive imports in January were from Yemen, with an average price of $991.74/mt ($19.07/MMBtu), while the cheapest shipments were from Russia, at an average $688.77/mt ($13.25/MMBtu).

In January, Japan's average LNG import price came in at $864.62/mt ($16.63/MMBtu), up 0.6% month on month and 45.7% year on year, according to the data.

The 74,422 mt cargo from Peru, which could be sourced from the spot market, was a single cargo sold at a DES price of $16.76/MMBtu, the customs data showed. Platts January LNG Japan Korea Marker was assessed near the trade price at $16.70/MMBtu on December 15.

The Japan Customs Cleared crude oil price in January was $113.333/barrel, down 0.7% from December 2011, but up 23.5% year on year.

Term LNG contracts tend to be linked to the JCC crude price, but with a lag of a few months, so fluctuations in oil prices typically take some time to feed through to LNG prices.

LNG imports by Japan's utilities have been increasing year on year as an alternative fuel for power generation since the March 11 earthquake.

Japan's peak winter season runs December through March, with the weather and nuclear situation having a direct impact on kerosene, fuel oil and LNG consumption for power and heating.

In Tokyo the average temperature recorded in January was 4.8 degrees Celsius, compared with the 20-year norm from 1991-2010 at 6.3 degrees Celsius, based on data from the US' National Aeronautics and Space Administration.

At the end of January, Japan's combined available nuclear generation capacity was 3.138 GW from three nuclear reactors, accounting for just 6.4% of the country's total installed nuclear capacity of 48.96 GW across 54 reactors. Nuclear capacity represents 21% of Japan's total installed power generation capacity of 228.479 GW.

Meanwhile, Japan recorded its highest monthly sales volume of city gas sales in January, hitting a record 3.905 billion cubic meters (137.90 Bcf), a 4.6% increase from last January, data released by the Japan Gas Association showed Monday.

January's sales were a 27.2% month-on-month increase from December's city gas sales of 3.070 billion cu m.

LNG consumption by Japan's 10 major power utilities was also at a record high of 5.234 million mt in January, up 27.1% from a year earlier, and up 5.1% from 4.981 million mt in December, according to a Platts analysis of data released February 13 by the Federation of Electric Power Companies.

The utilities also bought 5.19 million mt of LNG in January, up 39.2% year on year, making it the second-highest monthly volume after they bought 5.284 million mt in August 2011, according to the FEPC data.

--Chloe Hang, chloe_hang@platts.com