Australia LNG vies china sales to beat Indonesia: Report

Australia LNG Pty. said it sent a team to China to bid for natural gas supplies to Asia's fastest-growing market in competition with rivals from Indonesia, Malaysia, Russia and the Middle East, Bloomberg reported Tuesday.

``We have a team who are carrying out our submission in Beijing now,'' said Arthur Dixon, president of Australia LNG, which markets gas from the country's North West Shelf project. China's Joint Executive Commission will evaluate the bids and may make a recommendation to the State Development & Planning Commission (SPDC) as early as January, he said.

December 18 was the last day for liquefied natural gas producers including Iran, Qatar and Yemen to deliver submissions for 3 million metric tons a year of sales worth more than US$700 million at current prices to a terminal being built by BP Plc in the southern province of Guangdong.

China's Guangdong terminal is among few Asian LNG sales opportunities since the 1997 financial crisis set back economic expansion. Its importance is underscored by Indonesia's decision to send Energy Minister Purnomo Yusgiantoro and four other ministers to Beijing this week to win sales for the world's biggest LNG producer.

Indonesia is hoping to secure enough sales to warrant a go- ahead on BP's $2 billion Tangguh gas liquefaction project in the easternmost Irian Jaya province. BP will also own 30 percent of the terminal at Shenzhen in Guangdong which it's scheduled to complete by the end of 2005.

Still, BP's involvement in the terminal won't give it an advantage in securing the gas contract, Dixon said.

``The bid to supply LNG is divorced from any other considerations,'' he said. ``It's based on supply credentials.''

China's desire to get a share in any gas project that wins sales to the country also won't affect the contract award, he said.

The SDPC will shortlist two or three suppliers, possibly before the end of January, and ``we're working on the assumption that mid-next year, the Chinese authorities will have selected one party with whom to complete the contract,'' he said.

The contract would then probably be signed before the end of next year, he said. The partners in the North West Shelf would have to build a fifth LNG production, or train, if they were to win the contract, he said.

The partners are currently building their fourth train, which will raise capacity at the North West Shelf venture 56 percent, or 4.2 million tons, to 11.7 million tons a year. A fifth train would add another 4.2 million tons.

Woodside said last week that the partners in the venture have approved an $800 million pipeline that will have the capacity to carry gas from fields offshore Western Australia sufficient to supply trains four and five.

Tangguh will be Indonesia's third LNG production center, after Bontang in Kalimantan on Borneo Island and Arun on Sumatra Island. BP owns half of the gas reserves that would be exploited at Tangguh, which is also scheduled for completion in 2005.(*)