Kogas Makes First Profit from GLNG Project

Kogas said December 26 that is has made its first operating profit from its investment in Australian Gladstone LNG project.

The Korean state company made an operating profit of $24mn during the year 2017 and, with oil prices likely to increase, expects to make higher operating profit in 2018. But crude has stabilised at the relatively high price of a little over $60/barrel for some months; and spot LNG prices have risen sharply since autumn, following strong demand from China in particular.

Kogas said that GLNG business has faced difficult business environment as oil prices were low in the early part of 2017. Also, Australian government's insistence on enhancing domestic supplies was another challenge.  

This year the project recorded production of 89 LNG cargos (about 5.52mn metric tons) and sales of $2.1bn ($328mn for Kogas), generating a net cash flow for the first time since the start of the project, Kogas said.

Kogas paid $4bn for the 15% stake in the Queensland-based, Santos-operated GLNG project. It also has an agreement to buy 3.5mn mt/yr of LNG.