Korea Gas eyes stake sale in Iraq's Akkas gas field after 2015: source

Seoul (Platts)--7Feb2014/431 am EST/931 GMT


South Korea's state-owned Korea Gas Corp. plans to sell part its 100% stake at the Akkas gas field in Iraq after commercial production begins in 2015, a company official said Friday.

"The company submitted to the [South Korean] government last month a plan to sell part of its stake at the Akkas gas field after 2015. But details have not been decided yet," he said.

The official declined to reveal the size of the stake Kogas plans to sell, adding that it would ultimately be determined by the South Korean government.

But a finance ministry source told Platts Friday Kogas will sell less than 49% so that it can retain operatorship at the field.

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Major decisions at Kogas, such as stake purchases or sales, are finalized by the government, which holds a nearly 60% stake at the state utility.

The Akkas field, the first non-associated gas field to be developed in Iraq, is on track to start commercial production in September 2015, said the Kogas official. Kogas plans to produce about 400,000 Mcf/day for more than 13 years, he said.

Kogas signed a deal in 2011 to develop the Akkas gas field in the western province of Anbar, Iraq's largest, which has estimated reserves of 5.6 Tcf. Kogas received approval from the Iraqi government for the Akkas field development plan in September 2012 and completed pre-front end engineering and design in November 2012.

The company is involved in three other fields in Iraq. It has a 20% interest in the Mansuriya gas field in northern Iraq, a 30% stake in the Badra oil/gas field in western Iraq and a 25% interest in the Zubair oil/gas field in the south. NO PLANS TO SELL MOZAMBIQUE STAKE

Meanwhile, the Kogas official also said the company has no plans to sell its 10% stake in a gas field in Mozambique, denying a January 28 report by The Korea Economic Daily.

"The report is wrong. We don't have such plan," the official told Platts.

Kogas holds a 10% stake in the Area 4 gas block in Mozambique.

The South Korean utility has been looking to sell part of its overseas assets to improve its finances. KOGAS CEO Jang Seok-Hyo told Platts in October last year that the company would sell some or all of its 15% stake at Australia's Gladstone LNG project, and was also considering selling part of its 20% stake at Shell-led LNG Canada, among others.

Kogas is under pressure from the government to reduce its debt, which has grown due to massive overseas projects in the past few years. The government has called for Kogas to lower its debt-to-equity ratio to 274% by 2017, from 438% at the end of 2012. Kogas is owned 26.86% by South Korea's finance ministry, 24.46% by state power monopoly Korea Electric Power Corp. and 6.56% by the country's state-run National Pension Service. The rest of Kogas is held by individual investors.

--Charles Lee, newdesk@platts.com
--Edited by Deepa Vijiyasingam, deepa.vijiyasingam@platts.com

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