Korea Gas to Offer 20 to 40 LNG Cargoes

Kogas looking to offload up to 40 LNG cargoes; seeking to turn down output in Q3, arrange time-swaps. Fuel oversupply pushing down spot prices.

Korea Gas Corp. is looking to sell 20 to 40 cargoes of liquefied natural gas (LNG) this summer after misjudging the scale of its demand and committing to buy excessive supply, traders said.

State-run Kogas, faced with an over-supply it is unable to absorb, is seeking to offload cargoes through a combination of time-swap deals and reducing offtake from its suppliers, several traders said.

Time swaps would allow Kogas to direct its excess cargoes to needy buyers, and in return receive replacement deliveries at some point in the future.

This strategy may be difficult to realize as major Asian importers are already fully stocked and prices are falling rapidly due to weak demand, a trader said.

"In which case, they will need to try and reduce offtake in the third quarter under long-term deals, but it may already be too late to do that fully," another source said.

"They tied up too many deliveries options from various locations under the assumption that not all of it would arrive, but it seems that every last drop is now coming their way," he added.

Spot LNG prices for July have fallen to around $13.60 per mmBtu in Asia, compared with levels of around $19 per mmBtu earlier this year.

Reporting by Oleg Vukmanovic