Korean Companies Reap Rewards from Preemptive Gas Field Investments
The ongoing military conflict between the US and Iran is causing a shortage of liquefied natural gas (LNG) in the global market. The Strait of Hormuz, a key shipping route, has been blocked, making it difficult to transport LNG from major Middle Eastern pipelines. European countries are stocking up for winter, leading to increased competition for resources.
Korean companies that invested early in overseas gas fields are reaping benefits. SK Innovation E&S holds a 37.5% stake in the Barossa gas field project in Australia, alongside Santos with 50% and JERA with 12.5%. This investment has secured a stable supply of 1.3 million tons of LNG per year.
The real value of this investment lies in supply stability. Spot purchases become more expensive when market prices spike, but volumes tied to an equity stake follow a fixed cost structure regardless of market conditions. Another strength is that the project sits outside the Middle East, along a secure maritime route.
Korea Gas Corporation has also secured a 5% stake in LNG Canada and is bringing in 700,000 tons of LNG per year. Cargoes from Canada's west coast sail directly across the Pacific, spreading transport risk. POSCO International recently signed a contract to acquire gas fields in the Marcellus basin of the US Appalachian region for $550 million.