Australian gas wins major deal with China

CANBERRA, Australia, Aug. 8 (UPI) -- Australia Prime Minister John Howard announced Thursday a more than $10 billion contract to supply liquefied natural gas to China.

The contract, estimated at between $10 billion and $12 billion, is the country's largest-ever single export deal. The Australian consortium will supply LNG to China's Guangdong province from the offshore area known as the North West Shelf.

Originally one of six bidders for the contract, Australia was shortlisted with Indonesia and Qatar in January this year. At the time, it was thought Australia would do well to win just a share of the contract. But Thursday it was named the sole supplier.

The contract will run for 25 years, with the Australian consortium supplying more than 3 million tons of LNG each year for 25 year, starting from 2005-06.

The equal partners in the North West Shelf venture, known as Australia LNG, include the Woodside Energy -- which will be the operator and undertake development work -- and BHP Billiton's petroleum division, BP Developments Australia, Chevron Texaco Australia, Japan Australia LNG (MIMI) and Shell Australia.

All parties were jubilant about landing the deal.

"We're just delighted that the People's Republic (of China) have chosen us," Woodside Managing Director John Akehurst said.

Shell Chairman Tim Warren said the contract was proof Australia could compete in the global marketplace.

"This is excellent news for Australia, the North West Shelf joint venture and for Shell," he said.

The champagne corks were popping at Shell's Perth headquarters, and there was no skimping.

"Only the best -- Moet," Shell spokesman Antonius Papaspiropoulos told United Press International.

"It's a great win for the partners, but especially for Australia in terms of its place on the international stage," he said.

Papaspiropoulos said Australia was chosen "primarily for its security and stability of supply -- Australia has never missed a delivery -- and its politically stable environment."

But getting the contract was no easy matter.

"It was very hard fought," he said. "Pencils have had to be sharpened many times."

There was also no discounting the importance of Howard's recent visit to China where he personally lobbied on behalf of the consortium.

"His visit was intrinsic to our success," said Papaspiropoulos.

For local players Woodside and BHP Billiton, the deal will mean they can expect a long-term boost in baseload earnings. Their stock prices soared Thursday.

It may help Woodside shift its focus onto developing the Greater Sunrise fields, in the Timor Sea, 300 miles north of Darwin, which remain undeveloped for lack of demand.

For the North West Shelf partners, the win opens the way for more opportunities to exploit the area's massive natural gas reserves.

Australia LNG spokesman Tony Johnson told UPI the Greater North West Shelf is the world's fourth-largest LNG producer, and contains more than 100 trillion cubic feet of gas. To date, Japan has been almost the only customer, taking 128 cargoes last year. That will all soon change.

For Western Australia, the deal means economic development, and the creation of some 2,000 jobs directly and up to 80,000 indirectly in the longer term as LNG processing capacity doubles to meet supply commitments.

And for China, the deal means the start of its first LNG power-generation project and the introduction of a cleaner form of energy.