Sustainability Bonds

2020 Annual Report

Sustainability Bonds Issuances

Inaugural
Inaugural Issuances
Issuances of
of Sustainability
Sustainability Bonds
Bonds

· As Korea’s largest natural gas supplier, Kore Gas Corporation (“KOGAS”) is responsible for minimizing the impact of global
climate change and ecological footprint through safe and stable supply of natural gases. KOGAS’ funding through
Sustainability Bond is to fulfill its economic, environmental and social responsibilities
· In July 2019, KOGAS issued its inaugural US Dollar (“USD”) denominated Sustainability Bond, in the amount of US$500mm
with 10-year tenor
· The net proceeds of the bond will be used in line with Eligible Project Categories under KOGAS’ Sustainability Bond
Framework
 Eligible Project Categories
– Renewable Energy
– Low Carbon Transport
– Green Building
– Job Creation in Local SMEs
– Support Underprivileged Target Group
· Summary Terms of Sustainability Bond

Items KOGAS Sustainability Bond

Issue Date July 9, 2019

Offering Size US$500mm

Tenor 10-Year

Format 144A / Reg S

Maturity Date Jul 16, 2029

Benchmark Spread CT10+ 92.5 bps

Coupon 2.875%

Listing Singapore Exchange (“SGX”)

Net proceeds will be allocated to finance and/or refinance, in whole or in part, new and/or
Use of Proceeds existing projects from Eligible Project Categories in accordance with Korea Gas
Corporation’s Sustainability Bond Framework

Management
Management of
of Proceeds
Proceeds

· The net proceeds of each Sustainability Bond will be deposited in KOGAS’ Treasury Portfolio. An amount equivalent to the net
proceeds shall be allocated for the financing and/or refinancing of existing or new eligible projects. KOGAS’ treasury team will
track the net proceeds through its internal counting system

· Pending full allocation of the net proceeds, all or a portion of the net proceeds may be used for the payment of all or a portion
of outstanding indebtedness, temporary investment in cash, cash equivalents, investment grade securities or other
marketable securities, short-term instruments or other capital management activities

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Allocation and Impact Report

Allocation
Allocation of
of Net
Net Proceeds
Proceeds from
from Sustainability
Sustainability Bond
Bond

· Net Proceeds of Sustainability Bond: US$494,125,000

· Amount of net proceeds allocated: US$65.3mm (Approximately 13.2%)
· Breakdown between new financing and refinancing

– New financing: US$16.4mm (25.1%)

– Refinancing: US$48.9mm (74.9%)

Allocation by Green and Social Categories

Total Portion
Eligible Project Categories
(in 1,000 US$) (%)

Green 5,404 8.3%

Social 59,930 91.7%
Total 65,334 100%

Allocation by Key Projects

New Financing Refinancing Total Portion
Eligible Category Projects
(in 1,000 US$) (in 1,000 US$) (in 1,000 US$) (%)

Low Carbon Transport Hydrogen fuel infrastructure 5,404 - 5,404 8.3%

“Shared Growth Fund” – Fund

used for nurturing SMEs and
Job Creation in SMEs 8,235 45,902 54,137 82.8%
creating jobs within the natural
gas industry value chain

“Onnuri-Project” – Project to
Support Underprivileged improve heating efficiency(1) and
2,745 3,048 5,793 8.9%
Target Group provide medical / education
programs for target group

Total 16,384 48,950 65,334 100%

Selected
Selected Impact
Impact Indicators
Indicators

Eligible Category Projects 2016 2017 2018 2019

Number of SMEs financed 71 296 387 481

Job Creation in SMEs
Number of jobs created - 20,583 15,226 14,688

Support Underprivileged Number of households

1,039 1,163 1,266 1,359
Target Group supported

Note: (1) Improving efficiency by replacing and repairing floor heating units, flooring, wall insulation, windows, and wallpaper of low-income
underprivileged households and social welfare facilities

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Case Study

Hydrogen
Hydrogen Economy
Economy Roadmap
Roadmap(1)
(1)

· Hydrogen has attracted attention as a new energy source given its minimal environmental impacts. In 2018, the Korean
government announced a roadmap for ‘Hydrogen Economy’ to lead global Hydrogen Economy development as one of
Korea’s new growth areas
· In April 2019, KOGAS announced its plan to establish hydrogen production and distribution network to vitalize Korea’s
‘Hydrogen Economy’. Under the plan, KOGAS will construct 25 hydrogen-producing facilities and pipelines totaling 700
kilometers by 2030. KOGAS expects to supply 1.73 million tons of hydrogen by 2030, and supply over 60% of national
hydrogen demand by 2040
· KOGAS plans to spend KRW4.7tn to establish production, supply and import facilities by 2030

1st Phase (~2022) 2nd Phase (~2025) 3rd Phase (~2030)

Pipeline: 100km Pipeline: 600km Pipeline: 700km

Hydrogen production base

Hydrogen pipeline

KOGAS’ Targets
By 2022 By 2030

# of Production Facility 9 25

# of Overseas Production Unit - 1

Supply Pipeline 100km 700km

# of Charging Station 100 110

# of T/T 140 500

Green
Green Building
Building(2)
(2)

· KOGAS Talent Development Center in Gyeryong City, Korea

· Expected Completion Date: August 2022
· Size: 15,608m2
· Preliminary Local Green Building Ratings
– Green Building Certification: G-SEED 2 (Expected)
– Energy Efficiency Rating: 1++ (Expected)
– Zero Energy Building: Level 5 (Expected)
– Intelligent Smart Building Rating: Level 5 (Expected)

Note: (1) Roadmap as of December 2019 and subject to change

4 (2) Completion date and size may change as construction progresses