Regional LNG: Australia?s Woodside hopes Guangdong LNG deal finalized by year-end

Woodside Petroleum Ltd expects a A$25 billion (US$ = A$1.30) agreement to supply China with liquefied natural gas (LNG) from its North West Shelf joint venture off the northwest Australian coast will be finalised by the year-end, AFX-Asia reported Wednesday.

The group's gas and commercial director, David Maxwell, told an investors' conference here that finalization of the agreement with China National Offshore Oil Company (CNOOC) will allow LNG shipments to CNOOC's new Guangdong LNG import terminal to begin in 2006.

Maxwell said the project, operated and one-sixth owned by Woodside, is poised for further growth with approval for the construction of a fifth gas processing train expected in the first half of 2005, allowing production from the new facility to start in the final quarter of 2008.

A fourth gas processing train expansion was completed this year at a cost of A$2.7 billion, boosting output to 11.7 million tons a year from 7.5 million, underpinning the CNOOC contract, which extends over 25 years.

Maxwell said the venture's growth opportunities are underpinned by uncommitted gas resources within its offshore gas fields, coupled with growth in the established Japanese and South Korean markets and new opportunities in China and India and on the west coast of North America.

Elsewhere, Maxwell said, Woodside, about 34 percent owned by Royal Dutch/Shell, has other opportunities to develop LNG export projects, although he said the Greater Sunrise project in the Timor Sea will "stall" without a government-to-government agreement.

Ratification of a revenue splitting agreement between Australia and East Timor now seems unlikely after negotiations collapsed last month.

Woodside previously said the project, scheduled to start up in 2010, could be stalled for several years, unless East Timor signs the pact covering development by the year-end.

The Australian Government has already given its agreement.

Woodside has a 33.4 percent stake in Greater Sunrise, ConocoPhillips has 30 percent and Royal Dutch/Shell 25.56 percent, with the balance held by Osaka Gas.

Meanwhile, Maxwell said, studies have confirmed the viability of developing the company's third proposed LNG project, with China seen as a potential market. (*)