Australia?s NWS Venture may get part of S. Korea LNG tender: Report
Tuesday, October 12 2004 - 12:27 PM WIB
The Woodside Petroleum-operated North West Shelf Venture (NWSV) is believed to be one of several projects under consideration to supply LNG to South Korea starting in 2008.
This is despite a second Australian project, ChevronTexaco Corp.'s Gorgon gas venture saying on Monday that it didn't make a short-list of preferred suppliers for the contract.
Gallop will "promote WA's gas resources," given that South Korea is "currently looking for more gas," a government spokesman told Dow Jones Newswires.
The premier will be accompanied by Australian gas industry representatives and is expected to meet with South Korean energy and commerce officials early next week.
The NWSV welcomed the political lobbying efforts.
"We are appreciative of the state government's continued support for Western Australian gas projects," an NWSV spokesman told Dow Jones Newswires.
Woodside is operator and one-sixth owner of the shelf. The other equal partners are BHP Billiton, Royal Dutch/Shell, ChevronTexaco, BP PLC and Japan Australia LNG, itself an equal joint venture between Japan's Mitsubishi Corp. and Mitsui & Co.
The South Korean government recently gave the green light to Korea Gas Corp (KOGAS) to tender for as much as six million metric tons of LNG a year to be supplied over 20 to 25 years beginning in January 2008.
There is media speculation that KOGAS received as many as 12 bids for the tender. KOGAS notified unsuccessful bidders, including Gorgon, over the weekend.
However, there is speculation that the NWSV is on a short-list of five projects selected by KOGAS to enter into contract negotiations.
John Banner, president of NWSV, declined to confirm whether the venture is on the short-list.
"It is a confidential tender process and KOGAS is running it," Banner told Dow Jones Newswires on the sidelines of the Gas Australasia Pacific conference in Perth.
Speculation about the South Korean deal comes as global LNG demand continues rising.
"Our analysis is showing that the supply capabilities and demand over the next five to 10 years are going to be pretty closely in balance," Banner said in an interview.
"The overhang of supply that was anticipated in recent years seems to be evaporating," he said.
"The demand side is growing faster than had been expected a couple of years ago," he added.
Global LNG supply in 2010 is forecast at 225-230 million metric tons versus demand of 230 million tons, according to Banner's slide presentation at the conference.
Japan remains the world's biggest LNG importer, estimated at around 60 million tons a year.
The country remains a key focus for LNG suppliers, with around 19 million tons a year of contracts expiring in 2009-2011, Banner said.
Japan is a key customer of NWSV, which has shipped more than 1,600 LNG cargoes over 15 years, mainly to a core group of Japanese power utilities.
South Korea is the world's second largest and fastest growing LNG market, Banner said.
The country has seen "spectacular" LNG demand growth since the mid-1980s, and LNG imports rose 9 percent in 2003 to 19.4 million tons.
The U.S., which is looking to bolster dwindling local supplies of gas, is proving to be a major fillip for the LNG market.
The U.S. imported nine million tons of LNG in the eight months to the end of August, compared with 10.5 million tons in calendar 2003 and around six million tons in 2002.
"So the U.S. is well on track to exceed last year's imports," Banner said.
India is also set to become a significant importer this year, while China is due to begin LNG imports in late 2006.
China could be importing more than 20 million tons of LNG in 2012 via five planned receiving terminals, Banner forecasts.
Gas is likely to satisfy around 10 percent of China's primary energy consumption by 2020, up from 2 percent currently, said Yang Hua, senior vice president of Chinese oil and gas company CNOOC Ltd. (CEO).
CNOOC signed a A$25 billion LNG offtake deal with NWSV in 2002. Shipments to China's first LNG receiving terminal in Guangdong province are due to begin late 2006.
It is also finalizing the terms of a A$30 billion LNG offtake contract with ChevronTexaco's Gorgon project that was unveiled 12 months ago.
CNOOC said Tuesday it is in the final stages of negotiating the purchase of a 12.5 percent stake in Gorgon.
"We are trying to finalize the upstream equity by the end of the year," Yang Hua told reporters at the conference.
Gorgon is seeking environmental approvals to build a A$6 billion LNG venture that could begin shipments to China and the west coast of the U.S. in late 2008. Other partners in the project are Royal Dutch/Shell Group (RD) and Exxon Mobil Corp.
Yang Hua said an LNG offtake agreement with Gorgon that was foreshadowed in October last year is still under negotiation.
"I don't think that the company is in a position to announce the exact number of how much LNG per annum it will be taking," he said, when asked if the sales and purchase agreement will be completed by the end of 2004.
Earlier this week Gorgon officials said they expect to finalize the China deal, which may involve the supply of around four million tons a year of LNG to China, by the end of the year. (*)