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. Last Updated: 07/27/2016

Kogas Chief Arrested in Bribe-Taking Probe

For MT

Korean Gas CEO Kim Myung-kyu

Having just signed a large-scale cooperation agreement with Gazprom, Korean Gas CEO Kim Myung-kyu was arrested over the weekend in Seoul for allegedly taking bribes.

A prosecutor at the Seoul district public prosecutors office confirmed the arrest. "We arrested him last Saturday for the alleged bribery, and he will be detained until a trial schedule is set," Chae Dong-wook was quoted by Reuters as saying Monday.

Korean Gas, or Kogas, is the world's No. 2 liquefied natural gas purchaser.

South Korean prosecutors allege that Kim accepted 110 million won ($94,670) from a gas transport company in exchange for awarding it a key contract.

That gas transport company was not named, but observers were confident it could not be Gazprom, since it does not transport gas to South Korea.

The arrest took place just days after Kim returned from Moscow, where Kogas and Gazprom signed a memorandum of understanding covering a range of fields for future cooperation. At a news conference with his counterpart Alexei Miller, Kim gave no indication that he was in legal trouble, jovially telling Miller that working together would be natural since they both ran state-owned companies.

Under the agreement, both companies are to work on feasibility studies and seek financing for future shipments of Russian gas to South Korea. Kogas is expected to finish a feasibility study for a pipeline from the giant east Siberian Kovykta field, which holds 1.9 billion cubic meters of gas. The field's license is held by Rusia Petroleum, which is owned by BP, TNK, Interros and the Irkutsk regional administration.

The incident, however, is unlikely to affect cooperation plans between Gazprom and Kogas, both sides said.

"It's too bad for [Kim] that he ended up in this situation. But the agreement is a good one, and Kogas' internal problem will not affect it," said Kim Gheewhan, economics counselor at the South Korean Embassy in Moscow.

Gazprom representatives were equally confident that Kim's arrest would not impact the gas giant's projects with Kogas.

"The agreement is signed, and the latest developments should not have any effect on it," a company spokesman said Monday.

Officials at Kogas itself offered little explanation or comment Monday.

"We know he was arrested over the weekend, but we don't have any official stance on the case yet," company spokesman Lee Sang-wook told Reuters.