Australia, China LNG Deal Signed
Australia and China have signed off on the country's
single largest liquefied natural gas export contract,
worth A$25 billion, more than two years after it was first
announced. The deal between Australia's North West Shelf
gas and China's Guangdong province in southern China,
involves 3.3 million tons a year. The contract has a 25-year
life.
This was the first major LNG import agreement made by
China, and was first announced by Australian Prime Minister
John Howard in July 2002. The first imports will begin
in 2006.
Final agreement had been held up because of differences
over price, and the fact that the arrangement on the Chinese
side was complex, involving 11 organizations under one
umbrella organization, Guangdong Dapeng LNG. The most
powerful single company on the Chinese side was China
National Offshore Oil Corp. (CNOOC), one of China's state-owned
oil explorers and importers. CNOOC will take a 5% equity
position in North West Shelf gas reserves to underpin
the contract. This will take the form of a separate China
LNG project joint venture.
CNOOC will have a 25% stake and the existing Shelf partners
- Woodside Petroleum, BHP Billiton, BP, ChevronTexaco,
Japan Australia LNG (MIMI) and Shell - will each take
a 12.5% stake.
The Shelf project and Guangdong have agreed on a dedicated
shipping service between the two countries, and the formation
of an Australia-China natural gas technology partnership,
which will be used to train Chinese plant operators for
the receiving terminal.
Australia won the contract after intense competition
from Indonesia, Qatar, Russia and Yemen.
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