KOGAS, JERA of Japan agree to jointly purchase LNG

South Korea's state-run Korea Gas Corp. (KOGAS) has joined hands with JERA, a Japan-based global liquefied natural gas (LNG) corporation, in the wake of the government-level summit between both countries last month.

The two companies will continue energy cooperation through joint LNG purchases and swaps.

KOGAS on Monday said it signed a business agreement in LNG with JERA, which was jointly set up by Tokyo Electric Power Co. and Chubu Electric Power, and supplies 30% of Japan's electricity.

JERA as of March last year saw its annual LNG transactions equal about 37 million tons, competing with KOGAS for world first and second place on the LNG market. The deal has thus set a foothold for cooperation between Asia's largest buyers of the gas.

KOGAS and JERA will expand cooperation in fields like LNG joint purchase and trading, setup of a system for supply response cooperation at the energy security level such as using mutual vessels for optimizing transportation, sharing of LNG project data and joint searches for opportunities to participate in projects. 

Both nations have also laid the groundwork for joint response through LNG swaps if an energy supply crisis occurs in winter. For example, if KOGAS urgently needs LNG, JERA delivers the contracted supply to South Korea and KOGAS repays it later.

This agreement is a follow-up to the Korea-Japan summit of March 16. After the talks, Seoul announced preparation and promotion of such measures by government ministries to quickly restore bilateral ties.

The Ministry of Trade, Industry and Energy in Seoul at a March 30 meeting proposed that Japanese companies expand investment in a semiconductor cluster in Yongin, Gyeonggi Province.

KOGAS will also expand bilateral energy cooperation by firming up joint efforts in natural gas in step with the summit's results and stimulating exchange with Japanese energy companies.

"This agreement is an opportunity to prepare active strategies of joint response by Asia's leading buyers on the global LNG market, whose volatility has surged since the outbreak of the war between Russia and Ukraine," a KOGAS source said.

Write to Sul-Gi Lee at surugi@hankyung.com