Australian Minister says price main factor to decide China LNG winner

Price not politics will determine whether China awards a lucrative gas contract to an Australian consortium or two international competitors, Trade Minister Mark Vaile was quoted by AP as saying Tuesday.

Speaking after a visit to Beijing last week where he promoted the bid by Australia's Northwest Shelf gas project, Vaile said that even though Australia had a long trade history with China and had supported its application to join the World Trade Organization, price would be the biggest factor in the gas contract.

The message from Beijing was "that the Australian companies have to be in there competing hard all the way to the line," Vaile told reporters.

"At the end of this process, there is going to be a significant amount of emphasis placed on price," he said.

The Northwest Shelf consortium of six companies is one of three suppliers on a shortlist to provide 3 million metric tons (3.3 million short tons) a year of liquefied natural gas from 2005 to an import terminal in the Guangdong province of southern China. The other bidders are BP Indonesia and Qatar's Ras Laffan Co.

The 20-year contract is valued around US$ 398 million) a year.

Final bidding for the contract closes April 19 and a succession of ministers have been visiting Beijing to boost Australia's chances.

Industry Minister Ian Macfarlane promoted the Australian bid to officials during a visit to Beijing last week, and Prime Minister John Howard's office has said it will be on his agenda during a visit next month.

Australia's North West Shelf project is a joint venture between Woodside Petroleum Ltd., Chevron Texaco Corp., Royal Dutch/Shell Group, BHP Billiton Ltd., BP PLC, and Japan Australia LNG. (*)