Regional LNG: Australia to start LNG deliveries to China earlier: Report

Australia will start delivering liquefied natural gas to an import terminal China is building in the southern province of Guangdong earlier than originally planned, Prime Minister John Howard was quoted by Bloomberg as saying on Saturday.

LNG deliveries will start in April next year, ?ahead of schedule,? Howard said during the Boao Forum on China's Hainan Island. Shipments to the plant had been expected to start in mid- 2006.

Australia will supply A$25 billion ($19 billion) of the fuel over 25 years to the LNG terminal China National Offshore Oil Corp. is constructing in Shenzhen. That will satisfy part of the country's growing demand for the fuel, which may reach as much as 250 billion cubic meters a year by 2020 from an estimated 64.3 billion this year, the oil producer's President Fu Chengyu said.

?Domestic production can marginally meet demand at present, but it can't keep the same speed of increase in the long term,? said Fu, president of the nation's third-biggest oil company. About 50 percent of estimated demand in 15 years' time will be met by imports, he said during the forum.

China's wants to more than double the share of its energy produced from gas to 8 percent by 2010 to cut pollution and reduce the country's reliance on coal and crude oil. The country's demand for gas may increase by as much as 9.5 percent annually during the next 15 years, Fu said.

The country's soaring fuel needs present an opportunity for greater cooperation on energy investment with Australia, Ma Kai, chairman of the National Development and Reform Commission, China's top economic planning body, said today during the forum, a meeting of business executives and economic policy makers.

?China is the world's biggest LNG market,? Ma said. ?Our demand is very big and there is an excess of supply at the moment. When it comes to cooperation with Australia, let's negotiate, let's talk, to see how we can strengthen existing projects.?

China could be part of developing projects like the Browse Basin off Western Australia and ChevronTexaco Corp.'s proposed Gorgon LNG venture northwest of the country, Ma said. ?We are making progress,? he said.

LNG is natural gas that has been chilled into liquid form, reducing it to one-six hundredth of its original volume, for transportation by ship to destinations not connected by pipeline. On arrival, it's turned back into gas for distribution to power plants and other consumers.

Gas for the $600 million Shenzhen LNG terminal will come from the $10 billion North West Shelf Venture, operated by Woodside Petroleum Ltd., Australia's second-largest oil and gas producer. Woodside is also developing the Browse Basin, about 250 kilometers off the coast from Broome, which contains natural gas reserves of 850 billion cubic meters, Woodside Chief Executive Don Voelte said during the forum.

China National Offshore may also buy Australian gas for its fifth LNG terminal, which it is building on Hainan Island for 7.5 billion yuan ($906 million), Fu said.

The gas ?could be from Australia, Indonesia or Qatar, but we hope to buy as much Australian gas as possible,? he said. (*)