The Ministry of Commerce, Industry and Energy (MOCIE) said yesterday that four Korean companies, including Korea Gas (KOGAS), recently struck 20-year LNG import contracts with three foreign natural gas suppliers at rates 38% lower than current prices.

Under the agreements, Korea will import a combined five million tonnes of LNG annually from Yemen LNG, Malaysia LNG and Sakhalin Energy Investment, starting in 2008.

Yemen LNG will provide 2Mt of natural gas to Korea annually, with Malaysia LNG and Sakhalin Energy supplying 1.5Mt of LNG each.

The ministry said the long-term supply arrangements included a pricing cap that stopped the foreign LNG suppliers from hiking supply prices above a certain level, despite sharp surges in international LNG prices.

"Under the deal, LNG cannot be priced over a certain level, letting Korea ship in the fossil fuel at relatively stable price regardless of the fluctuations in the international crude oil and LNG oil markets," a MOCIE spokesman said.

The ministry said the long-term LNG supply contracts also helped the country diversify its gas import channels.

Korea imports about 20Mt of LNG a year. MOCIE expects the country's LNG demand to rise on average by 3.9% annually until 2017, when consumption will hit 31.7Mt.

KOGAS and other Korean firms have also succeeded in buying additional equity stakes in the Yemen gas development project, according to the Korea Times.