Regional LNG: Australia's North-West Shelf well positioned to win S. Korea LNG deal: PM

Australia's biggest single resources development, the North-West Shelf project, is well placed to secure part of a multibillion-dollar contract to supply South Korea with liquefied natural gas, according to Prime Minister John Howard as quoted by Austrealia's new paper The Age Monday.

Howard's cautious optimism about a mammoth long-term deal with Korea Gas Corp, worth about $US30 billion in total, came after he held talks with South Korea's new president, Roh Moo-Hyun.

"There are final decisions to be made but I think the flavour was that Australia had good prospects," he said yesterday, adding that any deal would be "mega".

Howard has also pressed Chile's leader, Ricardo Lagos, to consider Australia as an LNG supplier, and will lobby on behalf of Australian companies when he meets with China's leader Hu Jintao Monday.

The North-West Shelf venture, whose partners include Woodside Petroleum and BHP Billiton, has already snared a 25-year, $25 billion contract to supply China's Guangdong province with LNG and is bidding for similar sized contracts in other provinces.

Korea Gas Corp, one of the world's largest buyers of LNG, is expected to spend up to $US30 billion over 20 years from 2008, with the deal expected to be divided into three tranches.

The North-West Shelf consortium is considered to have an excellent chance of getting at least one of the contracts, with a decision expected in the next few months.

Another Western Australia-based consortium, the Gorgon project backed by ChevronTexaco, failed to make the shortlist that is believed to include ventures based in Yemen, Iran, Malaysia and Russia.

Underpinning the demand for Australian LNG is the record high price of oil and fears that the rapid industrialisation of the world's two most populous nations, China and India, will result in oil prices remaining high well into the future.

High demand has prompted a scramble among oil and gas majors. Woodside last week confirmed it hoped to double oil and gas production by the end of the decade. But the company again warned it may pull out of the controversial $7 billion Greater Sunrise project if the stand-off between the East Timorese and Australian Governments continues. Woodside chief Don Voelte has put a December deadline on a resolution.(*)