Regional LNG: China?s CNOOC under pressure to find new LNG sources: Report
Monday, October 31 2005 - 03:14 AM WIB
The newspaper said CNOOC and Chevron have been disputing the price to be paid by CNOOC for LNG gas from the US group?s Gorgon field.
The stalemate could force CNOOC to look elsewhere for supply, the paper said, citing the company's chairman and chief executive Fu Chengyu.
?China is a very large potential market, but not immediately a high gas price market,? Fu was quoted as saying.
?They are trying to find more potential buyers. We are also looking for potential suppliers.?
Chevron announced on Thursday it would sell 1.2 million tons of LNG a year to Tokyo Gas, starting in 2010, and also a possible equity stake.
The paper, citing executives at CNOOC and Chevron, said the discussions over Gorgon, a field off the West Australian coast, had stalled over pricing but had not been abandoned.
A collapse of the talks would raise concerns over CNOOC?s strategy in the gas market only months after its defeat in take-over Unocal Corp, a California-based oil group, the paper said.
Fu remains under pressure from the Chinese government, CNOOC?s majority shareholder, to find upstream reserves, which is increasingly difficult given uncertainties about both domestic and global prices.
CNOOC was a cornerstone customer of Gorgon and agreed in 2003 to take a 12.5 pct stake in the Gorgon project as part of a 25-year supply deal, the paper said.
It is pioneering the LNG business in China and signed two long-term contracts with fields in Australia and Indonesia in 2002, to be supplied through two new terminals in Guangdong and Fujian.
But the spot price of LNG has increased by three to four times since then, straining negotiations over new supply deals, the paper said.
Chinese buyers face an especially difficult market, because of government regulation of gas prices and the abundance of cheap coal as an alternative fuel. (*)