Trafigura and Kogas: New LNG Supply Agreement and Its Impact on South Korea

On August 25, Trafigura signed a long-term sale and purchase agreement (SPA) to supply liquefied natural gas (LNG) to South Korea’s major importer, Kogas. The deal involves Trafigura supplying approximately 700 000 tons of LNG per year to Kogas over the next decade, with pricing set at around 120-121 % of the US Henry Hub index plus a constant of about $4,20 per million Btu. The supply will be sourced from Trafigura’s global LNG portfolio, including offtake agreements with producers like Cheniere Energy.

Kogas’ CEO, Yeonhye Choi, stated that the agreement diversifies import channels and enhances South Korea’s energy supply stability. Additionally, Kogas is nearing the finalization of separate SPAs with TotalEnergies and BP, each for about 1 million tons of LNG per year. TotalEnergies’ offer is priced at approximately 119 % of Henry Hub with a $4 per million Btu constant, while BP’s offer is tied to Brent at around 11 %. These competitive prices reflect Kogas’ flexibility, enabled by its multiple terminals, storage facilities, and large-scale purchasing.

These agreements stem from a tender Kogas issued in May 2024 for long-term LNG supply. By securing these contracts, Kogas is not only strengthening its supply chain but also positioning South Korea as a key player in the global LNG market. These deals highlight Kogas’ strategic approach to leveraging its infrastructure for favorable terms, ensuring energy security for the nation.

The partnerships with Trafigura, TotalEnergies, and BP reflect a broader trend toward long-term agreements that provide stability in an increasingly competitive energy landscape, while also supporting South Korea’s commitment to meeting its energy demands sustainably.