CNOOC seeks more LNG
Wednesday, May 24 2006 - 01:49 PM WIB
Chairman Fu Chengyu said Wednesday that talks with the Indonesian government are making "good progress" on LNG imports for its Fujian LNG terminal, scheduled to run in 2008.
Fu also said the company hopes to source more LNG from Australia, which had shipped the first cargo of LNG to China in mid-May, for its Guangdong LNG terminal.
The terminal, China's first, will operate commercially by the end of the year.
China needs to secure external gas sources for its upcoming LNG terminals, but its reluctance to pay higher prices for gas -- as natural gas prices have soared on demand in recent years -- makes it harder to successfully secure gas supplies abroad.
In November, Chevron Corp. scrapped a tentative A$30 billion agreement for CNOOC to become a foundation customer for gas from Australia's Gorgon project.
Chevron said the price the Chinese were willing to pay was too low. Later in March, CNOOC said it ended talks on buying natural gas from the Gorgan project.
"It's not just about gas prices. The whole negotiation (with Indonesia) involves an overall strategic relationship between the two countries," Fu told reporters after the listed company's annual general meeting in Hong Kong.
"Both parties have to balance each other's interests," said Fu, who declined to elaborate further.
Early this month, Indonesian Mines and Energy Minister Purnomo Yusgiantoro said the government and CNOOC were close to finalizing a deal on raising the contracted price of LNG to be sold to China from the Tangguh project.
Indonesia, the world's sixth-largest natural gas producer, has been seeking an increase in the price of the LNG that it will supply to Fujian.
In July 2004, Indonesia signed an agreement to sell 2.6 million metric tons of LNG annually from 2008 to China for 15 years.
Under the deal originally agreed on, the crude oil ceiling price is at US$25 a barrel. Indonesian government officials had said the price limit will now likely be raised to US$35-US$38/bbl.
The Tangguh project is operated by a consortium led by BP PLC (BP), which holds around a 50% interest. The rest of the consortium comprises Japanese investors.
Fu also said CNOOC hopes to source more LNG from Australia for the second phase of its Guangdong terminal, which is scheduled to operate in 2008.
Woodside Petroleum Ltd. (WPL.AU), the operator of the North West Shelf project off the coast of Western Australia, will supply gas for the first phase of the Guangdong Terminal. Fu said the first shipment should arrive in China Thursday.
Western Australia state premier Alan Carpenter said earlier he and Australian Prime Minister John Howard will visit China next month to celebrate the start of gas sales to China from the multibillion dollar North West Shelf project.
Analysts said the market expects both countries will talk about more cooperation on energy issues, including LNG supply. (*)