Regional LNG: CNOOC pulls out of Gorgon: Report

China National Offshore Oil Corporation (CNOOC) has pulled out of negotiation for the A$30 billion LNG supply contract with the Chevron-led Australia?s Gorgon gas project, The Australian daily reported Thursday.

Gorgon officials was quoted by the daily as saying that CNOOC was investigating supplies from other projects around the world, and insisted the Gorgon asking price was too high.

But the officials emphasized that the Gorgon partners still expected CNOOC to resume negotiations after reviewing prices, volumes and shipment timings from other projects.

In October 2003, CNOOC and Gorgon signed an agreement that called for the parties to "place a significant volume of Gorgon LNG for use in the growing Chinese market".

CNOOC was then seeking to take up to 12.5 per cent equity in the A$11 billion project to build a LNG plant on Barrow Island off the northern cost of Western Australian, producing 10 million tonnes a year.

In March CNOOC senior vice-president Cao Yunshi said the plan to buy a stake in Gorgon faced "stumbling blocks due to disagreements with partners over pricing and equity shares".

CNOOC negotiators argued that Gorgon should provide gas at the same price as the competing North West Gas project did in its successful tender to supply China's first LNG receival, in Guangdong province.

The Gorgon partners are Chevron ( 50 percent), Shell and ExxonMobil (each 25 per cent). (*)