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TotalEnergies and KOGAS Formalize Long-Term LNG Supply Agreement

TotalEnergies (TTE) and KOGAS have signed a Heads of Agreement for the annual delivery of 1 million tons of LNG to South Korea over a 10-year period, commencing in late 2027 and increasing to 3 million tons annually from 2028. This deal underscores robust demand for liquefied natural gas and enhances TotalEnergies' strategic position in the global LNG market while bolstering South Korea's energy security. TotalEnergies and KOGAS Finalize Decade-Long LNG Supply Contract TotalEnergies SE (TTE) and KOGAS, South Korea's national natural gas company, have announced the signing of a Heads of Agreement (HoA) for a significant long-term liquefied natural gas (LNG) supply. This agreement solidifies the delivery of 1 million tons (Mt) of LNG annually to South Korea over a 10-year period, beginning at the end of 2027. The contracted volume is set to increase to 3 Mt per year from 2028 onward. Details of the Supply Agreement The additional LNG volumes will be sourced from TotalEnergies' global supply portfolio, with a notable portion originating from its U.S. LNG production and offtake. These supplies are earmarked to support Korean industries, businesses, and households. This strategic contract follows an international tender awarded to TotalEnergies by KOGAS, which currently stands as the world's largest LNG importer. TotalEnergies is positioned as the world's third-largest LNG player, boasting a global portfolio of 40 Mt/y in 2024 through its interests in liquefaction plants across various geographies. Market Implications and Strategic Positioning This agreement carries significant implications for both TotalEnergies and the broader LNG market. For TotalEnergies, the deal secures a substantial, long-term revenue stream, reinforcing its global LNG market share and strategic positioning. It aligns with the company's objective to enhance its contractual flexibility and market diversity, particularly by leveraging its international portfolio, including U.S. supplies. The emphasis on supply diversification within the contract reflects a broader trend towards stable, long-term energy agreements amidst a landscape of geopolitical unpredictability. For South Korea, the agreement contributes directly to national energy security by diversifying its sources of supply and ensuring a consistent flow of a critical energy resource. The robust nature of this long-term commitment signals continued strong demand for LNG globally, potentially influencing investment decisions in LNG infrastructure and benefiting other major producers such as Cheniere Energy and BP plc. Broader Context: Surging Global LNG Demand The signing of this HoA comes at a time when global demand for LNG is projected for substantial growth. According to Shell's (SHEL) LNG Outlook 2025 report, global demand for LNG is forecasted to rise approximately 60% by 2040. This anticipated growth is largely driven by several key factors: economic expansion in Asia, global efforts toward emission reductions in heavy industry and transport, and the increasing energy demands spurred by artificial intelligence development. TotalEnergies has an integrated position across the entire LNG value chain, encompassing production, transportation, access to over 20 Mtpa of regasification capacity in Europe, trading, and LNG bunkering. This comprehensive vertical integration further strengthens its ability to meet the increasing global demand. Executive Commentary Patrick Pouyanné, Chairman and CEO of TotalEnergies, commented on the agreement: > "We thank KOGAS for its trust in TotalEnergies' ability to supply its Asian customers with reliable and competitive LNG through its global portfolio. This agreement enables TotalEnergies to secure long-term outlets in Asia, consistently with the growth of its LNG supply, particularly from the United States." Yeonhye Choi, President and CEO of KOGAS, echoed this sentiment: > "We are pleased to finalize this agreement with TotalEnergies, which not only enhances the economic value of our LNG portfolio but also contributes to diversifying our sources of LNG supply. This engagement reinforces our commitment to securing a stable LNG supply amid a rapidly changing global energy landscape." Outlook and Future Implications This agreement underscores the growing importance of long-term contracts in the global energy market, providing producers with revenue certainty and importers with supply stability. Looking ahead, the factors driving LNG demand—particularly in Asia—are expected to persist, suggesting continued investment in liquefaction and regasification infrastructure. TotalEnergies' ongoing strategy to increase the share of natural gas in its sales mix to nearly 50% by 2030 indicates its confidence in the fuel's long-term viability and its role in the global energy transition, including efforts to reduce carbon emissions and facilitate the transition from coal to natural gas. The market will closely monitor future developments in international LNG contracts and infrastructure projects as the global energy landscape continues to evolve.