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- PetroChina agrees to buy Australian LNG
Date: 7-Sep-2007 Sources: (Shenzhen Daily)
PETROCHINA Co. agreed to buy as much as A$60 billion (US$49 billion) of Australian liquefied natural gas (LNG) in two accords signed this week as China's demand for the fuel forces it to accept prices that have tripled in five years.
PetroChina, Asia's biggest oil company by market value, would buy as much as 3 million metric tons a year of LNG from Woodside Petroleum Ltd.'s Browse project in Western Australia under an initial agreement signed Thursday. The 15-to-20 year accord would start as soon as 2013. PetroChina this week agreed with Royal Dutch Shell Plc. to buy LNG from the Gorgon venture.
Global LNG contract prices have been driven higher by increasing demand from power companies for cleaner-burning fuels and delays in supply projects caused by a jump in plant construction costs. China is returning as a customer for Australian LNG five years after a contract signed by China National Offshore Oil Corp. at near record-low prices.
'Woodside wouldn't be selling the LNG now unless the Chinese had changed their minds on pricing,'' said Stuart Baker, a Melbourne-based oil and gas analyst at Morgan Stanley in Melbourne. 'If the Chinese stick to the pricing structure they agreed last time round in 2002 or 2003, then they are not going to get access to supply.''
The agreement by Woodside Petroleum to sell Browse LNG to PetroChina would, if confirmed, be the nation's biggest export deal, Australia's Resources Minister Ian Macfarlane said. The transaction is worth between A$35 billion and A$45 billion in revenues, Woodside chief financial officer Mark Chatterji said.
China has been paying prices for LNG on the spot market that are more than double the price of fuel supplied under contract by the Woodside-operated North West Shelf venture to China National Offshore.
China is turning to natural gas as demand for cleaner-burning fuels increases in the world's fastest-growing major economy.
PetroChina plans to build three LNG import terminals: in Rudong in Jiangsu Province, Dalian in Liaoning and Tangshan in Hebei, with the first due for completion by 2010. It also has a 25-year accord to buy 3 million tons a year of LNG from Iran, starting in 2011. It isn't decided yet which terminal the Browse LNG will be sent to.
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