Shell expects China LNG contracts decision by July: Report

Royal Dutch/Shell Group, Europe's biggest oil producer, said it expects a decision by the end of July on bids to supply China's first liquefied natural gas import terminal, Bloomberg reported Wednesday.

China National Offshore Oil Corp. must decide ``quickly'' to avoid stalling the project that's due for completion by late 2005, said Peter de Wit, director of Asia Pacific/Global LNG at Shell.

Shell owns one-sixth of Australia's North West Shelf venture, which is competing with Qatar and BP Plc's Tangguh project in Indonesia to supply China, the world's fastest-growing gas market that could more than double imports by 2010. The contract is worth about $600 million a year, based on prices in Japan last year.

``The Chinese are very close to coming to a decision,'' de Wit told reporters at the Asia Oil & Gas Conference in Kuala Lumpur. ``The process is taking a long time to come to this point. To stick with the timetable they've set themselves they really need to make decisions.''

Rival BP said it doesn't know when China National Offshore will reach a decision on the terminal, to be built in Guangdong province. BP also owns one-sixth of the North West Shelf.

``We will sit and wait for them to call,'' said Anne Quinn, BP's group vice president of gas, power and renewables, in an interview at the conference. ``There will be some natural window where it could actually begin to interfere with the timing of the terminal but they're not at that stage yet.''

De Wit said he doesn't know whether the North West Shelf will be successful, though Shell is ``hopeful'' the venture will win the contract. Other one-sixth shareholders in the North West Shelf are ChevronTexaco Corp., BHP Billiton, Woodside Petroleum Ltd. and Japan Australia LNG Pty.

China, which is expected to name more than one supplier, shortlisted Qatar, Australia and Indonesia earlier this year from a list of bidders that included Russia and Malaysia.

Shell may sell LNG to Mexico from another Australian project, de Wit said. The A$5 billion ($2.85 billion) Sunrise venture has been stalled by wrangling between Shell and Phillips Petroleum Co. over how it should be exploited.

Japan, which buys LNG from the North West Shelf, has several other suppliers with surplus production capacity, de Wit said.

Shell wants to build the world's first floating LNG plant that would tap the field and convert the gas to LNG. While Phillips wants to pipe it ashore, the other partners, Woodside and Osaka Gas Co., have both backed Shell's proposal.

``For this sort of new technology approach, we think it's better to aim for other markets like Mexico,'' de Wit said.

Shell is planning a $500 million plant in Baja California, Mexico that could convert the LNG back into gas, he said. (*)