Regional LNG: China to finalize A$30 billion Australian gas deal: Report

Chinese officials are preparing to fly into Western Australia to potentially finalize Australia's biggest export deal by locking in the terms of last year's A$30 billion sales agreement over the huge Gorgon gasfields off the north-west Australian coast, the West Australian newspaper reported citing a spokeswoman for Gorgon project manager ChevronTexaco.

The newspaper said a delegation from China National Offshore Oil Corp (CNOOC) was due in Western Australia late this month or early next month after visiting the east coast.

It said while ChevronTexaco Corp spokeswoman Melissa Smith said the visit "doesn't necessarily" mean a firm sales agreement for Gorgon will be finalized at the same time, a preliminary deal signed last October between the venture and CNOOC is for an initial 12-month period, and will need to be converted to a formal letter of intent soon.

"We will need to execute a firm sales contract by the end of the year," Smith told the newspaper.

Under the terms of last year's non-binding preliminary agreement, Gorgon will supply up to 100 million metric tons of liquefied natural gas over 25 years while CNOOC will acquire a stake of up to 12.5 pct in the field's reserves.

The deal eclipses a A$25 billion agreement struck in 2002 between CNOOC and the North West Shelf gas project partners, led by Woodside Petroleum, to supply more than 3.3 million tons of LNG a year to Guangdong province.

The Gorgon partners -- ChevronTexaco (57 pct), Shell (28 pct) and Exxon Mobil (14 pct) -- plan to build an initial 5 mln tons a year LNG plant on Barrow Island near the offshore gasfields at an upfront cost of A$6 billion.(*)