South Korea utility coal demand seen at 73 million tonne this year - KEPCO

Monday, 13 Feb 2012

An official at state-run Korea Electric Power Corp said that South Korea's five state run power utilities will need 73 million tonnes of steaming coal this year, of which 52% has already been secured. KEPCO did not provide figures for last year's consumption.

A utility source said demand last year had reached at a similar level, adding that earlier projections had put demand this year at up to 80 million tonnes, but a shift to high calorific coal after a nationwide power shortage late last year had reduced the volume of demand.

KEPCO and other utility officials said procurements this year had been made at an average of about USD 115 per tonne on a cost-and-freight basis, adding that most were made through long-term contracts rather than spot purchases.

KEPCO fully owns five utilities Korea East West Power Co, Korea Southern Power Co, Korea South East Power Co, Korea Western Power Co and Korea Midland Power Co.

(Sourced from Reuters)

S.Korea's KEPCO signs $582 mln Senegal power deal

Wed Jan 18, 2012

DAKAR Jan 18 (Reuters) - Korea Electric Power Corp announced on Wednesday an accord with the West African state of Senegal to supply it with a 250 MW coal-fired power station at a cost of 300 billion CFA francs ($582.52 million) to be operational from 2015.

Under the agreement, KEPCO and the Korean Development Bank will entirely finance the building of the plant but in return will have the right to sell its energy output back to Senegal, which is fighting to overcome shortages in its power sector.

The agreement was unveiled at a joint news conference with KEPCO CEO Seung Kyoo An and Energy Minister Karim Wade.

(sourced Reuters)

KEPCO considers overseas coal trading firm by end-2012

Wed Feb 16, 2011

* In talks with foreign partners, local utilities -sources
* Trading firm could be located in Singapore -one source
* To start with coal and expand to LNG and uranium -sources
* Plans for futures trading for risk management -sources
(Adds more details and quotes)
By Cho Mee-young

SEOUL, Feb 16 (Reuters) - Korea Electric Power Corp (KEPCO) , state-run utility in the world's No.3 coal buyer South Korea, aims to set up its first coal trading firm in a move that could give a boost to spot market trading in Asia in the face of surging prices.
The proposed firm, due to be set up by the end of 2012, will be based overseas and will possibly be a joint-venture with foreign partners and local utilities, company and industry sources said on Wednesday.

KEPCO may set up the new trading company in Singapore, one person with knowledge of the matter told Reuters. However, a company source said the location has yet to be decided.
The government and president of South Korea, the world's No.2 liquefied natural gas (LNG) buyer after Japan and No.5 crude oil importer, have been calling for various ways to efficiently secure commodities and energy as global prices rally. The country imports almost all its feedstocks for power generation.

The trading firm may signal a shift from the norm of securing large volumes under long-term contracts to buying via the spot market, as more Asian utilities break away from decades-old fixed-price purchases to a flexible trading model to cope with growing price volatility.
"The firm will procure and trade coal from those overseas mines where KEPCO holds stakes to supply local utilities, as so far there has been no coal trading entity for the utilities," said one company official, who declined to be identified because he was not authorised to talk to the media.

He said that KEPCO is in informal talks with foreign utilities and trading firms to be its partners, although major trading companies were excluded so far.
KEPCO has stakes mainly in coal mines in Australia and Indonesia, its two major suppliers, he added.

HERALDS ACTIVE TRADING

Should more utilities enter spot trading, it could herald growing demand for coal derivative products as power companies seek hedging instruments to manage price risks, traders said.

"We plan to eventually expand the firm's procuring and trading products to other raw materials for power generation including uranium and liquefied natural gas," the KEPCO official said.

"At the initial stage, the firm will focus on physical trading, but in the long term, it may trade futures for risk management if trading volumes expand and supplies diversify."

An Asia-based trade source said the proposed trading firm would enable KEPCO not to rely on tenders and that they could buy coal on the open market more easily.

Reflecting the persistently strong prices, annual negotiations between Australian coal producers and Japanese utilities for thermal coal contracts expected to meet or exceed record levels seen in 2008.

"It will mean more liquidity in Asia," said another source based in Singapore.

"Hopefully, we can see more North Asian companies coming to Singapore to trade. So far, the Koreans are definitely the most aggressive in the spot market."

South Korea has five utilities, which are fully owned by KEPCO -- Korea Midland Power Co Ltd, Korea Western Power Co Ltd, Korea East-West Power Co Ltd, Korea South-East Power Co Ltd and Korea Southern Power Co Ltd. KEPCO also fully owns Korea Hydro & Nuclear Power Co Ltd.

In August 2009, Korea East-West Power Co Ltd and trading company LG Corp considered a joint venture in Australia mainly to procure coal in the spot market, industry sources close to the deal said at that time.

The talks have since collapsed, and KEPCO has leaned toward the plan for a coal trading firm, sources said. (Additional reporting by Rebekah Kebede in PERTH and Fayen Wong in SHANGHAI; Editing by Ramthan Hussain,sourced:routers)

Tags:KEPCO, overseas coal trading firm, South Korean news, coal spot market, Singapore