Regional LNG: Australia?s Trade Minister to visit China

Lobbying for increased supply of liquefied natural gas to China will be a major focus of a visit to that country by Australia's Trade Minister Mark Vaile, an Australian official was quoted by Dow Jones Newswires as saying on Monday.

The minister will also co-chair a meeting in Beijing on April 26-27 of an Australia/China joint ministerial economic commission, the first such meeting since 1999, the official said.

High on the agenda for this meeting will be a review of the progress of a scoping study into a possible free trade agreement between the two countries, he said.

The official, who was briefing reporters on the condition of anonymity, said the visit offers an "excellent opportunity" for Vaile to further promote Australian LNG and to continue to raise Australia's profile among China's leadership as "a long-term competitive stable source of supply of competitive LNG."

Australia's North West Shelf joint venture already has agreed to supply 3.25 million metric tons of LNG a year from 2006 to an import facility in Guangdong province, a supply agreement estimated to be worth a total of around A$25 billion.

On March 31, John Gass, president of ChevronTexaco Corp.'s global gas division, a partner in the North West Shelf, said the U.S. energy company's Australia-based Gorgon joint venture was a front-runner to supply LNG to a proposed US$1.7 billion Zhejiang import terminal in China. The planned facility will be energy-hungry China's third LNG import terminal.

The Australian official said that on April 22 Vaile will visit Guangdong, a province of major economic growth but energy deficient, to meet local government officials and the chief executives of the three LNG end-user companies there.

Vaile will then visit Shanghai on April 23 for "further discussions on LNG" with the mayor of the city, he said.

Meanwhile, the joint ministerial commission meeting will review progress and also provide guidance to officials undertaking the scoping study on the possible trade agreement, he said.

"There's very very strong positive goodwill on the Chinese side to move forward with this study," which is expected to be comfortably completed by October 2005, he said.

The official said China doesn't have a free trade agreement with any other country, he said.

"It represents a major opportunity for both countries," he added.

Australia expects a number of announcements coming out of the ministerial meeting covering the promotion of bilateral trade, but also investment, he said.

The meeting will focus broadly on liberalizing trade and identifying impediments but won't focus on commercial deals. The meeting likely will result in some government-to-government trade announcements but details still are being worked out, another official said.

The briefing by the official came as Resources Minister Ian Macfarlane said trade between the two nations will continue to grow strongly, fueled in part by China's robust demand for raw materials.

Australia is China's number one supplier of commodities such as iron ore, alumina and coal, and after Japan, China is the largest importer of Australian mineral and energy products, Macfarlane said. China mostly exports a range of manufactured products to Australia.

The future nucleus of this trade is the North West Shelf LNG supply contract, he said.

"It will see our trading relationship continue its dramatic growth which has averaged 19% annually since 1997," he said.

In 2003, bilateral trade totaled US$13.5 billion, up 30% on 2002, he said.

Macfarlane was speaking at the formal opening of Rio Tinto Ltd.'s US$64 million Eastern Range iron ore mine in the northwest Pilbara region, a joint venture with China's largest steelmaker Shanghai Baosteel Group. (*)