[Exclusive] ‘Hanil Conflict’ at Indonesian Gas Field... Golden Egg Project at Risk

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Storage tanks at the Korea Gas Corporation Pyeongtaek Liquefied Natural Gas (LNG) terminal located in Pyeongtaek, Gyeonggi Province.
[Photo by Korea Gas Corporation]

[Asia Economy Sejong=Reporters Junhyung Lee and Hyunji Kwon] It has been confirmed that the core factor behind Korea Gas Corporation's decision to withdraw from the Senoro gas field project in Indonesia was a conflict with Japan's Mitsubishi Corporation. The conflict between the two companies arose when Mitsubishi decided to expand the project independently, bypassing Gas Corporation, a joint investor in the gas field. Concerns are growing that the fallout could affect Gas Corporation's other projects in Indonesia.

According to data submitted by Gas Corporation to the office of Representative Yongho Noh of the People Power Party on the 20th, Mitsubishi signed a contract with the Indonesian government in April this year to extend the Senoro project. The Senoro project involves exporting gas extracted from the gas field on Sulawesi Island in northern Indonesia to Korea and Japan. Previously, Gas Corporation partnered with Mitsubishi in 2011 to establish the joint venture 'TEL' and secured a 20% stake in the Senoro gas field. The shareholding ratio in TEL is 49% for Gas Corporation and 51% for Mitsubishi.

The problem is that Mitsubishi signed the contract to extend the project without Gas Corporation's consent. When Gas Corporation partnered with Mitsubishi in 2011 to enter the Senoro project, the initial project period was set until 2027. To continue the project beyond that, mutual agreement between the two companies is essential. According to the 'Shareholders Agreement' signed between Gas Corporation and Mitsubishi in 2011, decisions such as contract extensions require the approval of over 90% of shareholders.

Gas Corporation has received dividends amounting to approximately 73 billion KRW from the Senoro gas field over the past four years. However, since trust with Mitsubishi has been broken due to this incident, Gas Corporation has judged that future joint projects will inevitably face difficulties and resolved at the board meeting in June to participate only until the initial project period ends in 2027. Alongside this, Gas Corporation is also considering legal action to hold Mitsubishi accountable for this situation.

Attention is also focused on the potential impact on the Indonesia DSLNG project jointly invested in by Gas Corporation and Mitsubishi. DSLNG is a project that liquefies the gas extracted from the Senoro gas field into liquefied natural gas (LNG), with the joint venture (SLD) holding a 59.9% stake.

This content was produced with the assistance of AI translation services.