Posco International logo (Posco International)
Posco International, the trading arm of the country’s leading steelmaker, said Sunday it was accelerating its business expansion into global natural gas exploration and production by acquiring Australian natural gas producer Senex Energy.
The company said it had signed a joint investment deal with Hancock Energy, an Australian partner, to acquire a 50.1 percent stake in Senex Energy. The deal is expected to be finalized sometime in March as soon as it gets approval from Senex’s shareholders and the local court.
The latest deal, worth 770.9 billion won ($652.19 million), is Posco International largest-ever acquisition since the firm was integrated into Posco Group in 2010.
Senex is the sixth biggest Australian natural gas exploration and production company that has a gas fixture in Atlas, Roma North and Louisiana, and mine exploration in Artemis and Rockybar.
Around 540 million cubic meters of natural gas produced by Senex is sold in the eastern region of Australia and in LNG plant market each year.
Australia’s advanced mining industry means that it already has infrastructure and demand in place, reducing the investment risks for Posco International.
The company also found it attractive that they can utilize the already built gas pipes to sell to customers in eastern Australia, which would help save initial investment costs.
They plan to actively make use of Senex’s 20 years of experience in exploration and production.
With the acquisition, Posco International will have 223 billion cubic meters of natural gas in reserves, which is around 44 percent the natural gas used in a year in South Korea.
The company also anticipates to contribute to Posco Group’s carbon neutral goal through carbon capture and storage businesses and production of hydrogen using of Senex’s gas plants.
“Natural gas will play an import role in preparing for the emerging hydrogen economy era. This deal will be a turning point to expand energy conversion business and to strengthen our position as a global natural gas developer” said Posco International CEO Joo Si-bo.
Posco International had declared an evolution into a general business company and had entered the steel, energy and food businesses.
But this acquisition is likely to serve as jumping off point for the company to become a global player and expand its natural gas business.