Under the agreement BP will acquire a 35% interest in SK Power, which has begun constructing the power station in Gwangyang. SK Corporation, which previously owned 100% of SK Power, will retain a 65% interest.

SK Power was established by SK Corporation to develop, finance, construct, operate and maintain the 1,074 megawatt gas-fired combined cycle power project located in Kwangyang Province, South Korea. The project will be located adjacent to an LNG importation facility being developed by POSCO. The project is the first privately owned generation facility being developed to compete in Korea's liberalised electricity generation industry.

This agreement follows the earlier selection of the Tangguh LNG project in Indonesia as the supplier of up to 1.35 million tonnes per annum (mtpa) of LNG to SK Power, and POSCO, the world's second largest steel maker. Negotiations to finalise both contracts are expected to conclude in early 2004. The power plant will require more than 0.6 million tonnes of LNG per year.

SK Power has appointed Daelim Industrial Company to act as the engineering, procurement and construction contractor for the project. The project will employ GE Power Systems' state-of-the-art MS7001FA gas turbine technology.

"BP is delighted with this agreement and is pleased to be working closely with SK on this venture. Korea is an increasingly important gas and power market and participating in this power station enables us to capture market share ahead of equity gas supply in one of the world's fastest growing LNG markets. It also provides us with an opportunity to enter the Korean power market and to secure an important strategic position for the future," said Ralph Alexander, chief executive of BP's Gas, Power and Renewables business.