Australia LNG expects China contract to rise to 3.5 MT annually: Bloomberg
Monday, February 24 2003 - 11:10 AM WIB
China National, or CNOOC, China's biggest offshore oil and gas producer, may buy 3.5 million tons of LNG a year or more, said Arthur Dixon, president of Australia LNG Pty. That's up from the 3.3 million a year for 25 years agreed in August, and 17 percent more than the 3 million tons a year originally planned.
CNOOC is building China's first LNG import terminal in Guangdong as China's government encourages power producers to switch to the cleaner-burning fuel from coal. More generators have gained approval to buy Guangdong's LNG, raising the chance CNOOC will buy more, said Dixon. That may boost the contract value from an original estimate of A$25 billion ($14.9 billion), he said.
?It will be probably nearer to 3.5 (million tons) than 3.3 and there are still options which the buyer has that could take it even higher,? Dixon said in an interview.
CNOOC hasn't officially exercised its option to increase the volume, Dixon said. The contract with the Woodside Petroleum Ltd.- led North West Shelf venture, signed in August, is subject to China's approval of two feasibility studies, Dixon said.
The Guangdong terminal is scheduled to start receiving LNG in the first half of 2006, later than the originally planned end of 2005. Some of the lost time may be made up, he said.
Gas will be shipped to China from Australia using three LNG tankers. Two of the ships will be 70 percent owned by Chinese companies COSCO Shipping Co. and China Merchant Holdings Co., and 30 percent by the North West Shelf partners, Dixon said. The third is likely to be chartered.
Woodside owns one-sixth of the North West Shelf venture, Australia's largest oil and gas project. Other partners holding one-sixth stakes are Royal Dutch/Shell Group, BP Plc, ChevronTexaco Corp., BHP Billiton and Japan Australia LNG Pty.
Korea
Australia LNG may get more supply contracts in Korea, after signing an initial agreement last month to sell 500,000 tons a year of LNG to Korea Gas Corp. for seven years, starting late this year, Dixon said. Korea Gas may add another long-term contract later this year for perhaps 4 million tons a year he said.
?My view is that Kogas is pretty soon going to be allowed to do another big deal, and when I say pretty soon I mean during the course of this year,? he said.
Australia LNG may offer to supply gas to Chinese Petroleum Corp., if the Taiwanese company decides to bid to supply the fuel to a power station proposed by Taiwan Power Co. in northern Taiwan, Dixon said. Australia LNG decided in December not to bid directly for the Taiwan Power tender.
?CPC hasn't decided whether to bid yet,? he said. ?They are looking for possible LNG suppliers and we are talking to them about it.? (*)