Record gas deal for Exxon and PetroChina

BEIJING, Aug. 19 (UPI) -- ExxonMobil Australia and PetroChina signed a record $50 billion gas deal Tuesday, the single biggest trade agreement in Australia's history.

The 20-year sales and purchase contract is for the supply of some 2.25 million tons of liquefied natural gas a year from ExxonMobil's yet-to-be developed massive Gorgon project in Western Australia.

"This unprecedented export deal confirms Australia's place as a global energy superpower supplying vital clean energy resources and technologies to China and our other Asia-Pacific trading partners,'' said Australian Minister for Resources and Energy Martin Ferguson, the Melbourne Herald Sun reports.

Ferguson noted that Australia had "an obligation to help China and our other neighbors in the Asia-Pacific to meet their growing energy needs in a sustainable way."

The Greater Gorgon area is Australia's largest known gas resource and holds more than 40 trillion cubic feet of natural gas.

Ferguson said the Gorgon LNG project will be "the biggest single investment ever made in Australia, breaking the record set only a few years ago by the $12 billion Pluto LNG project now under construction in Western Australia."

"Natural gas from our share of the Gorgon LNG Project will provide a reliable source of clean energy to help meet China's growing demand," Luke Musgrave, ExxonMobil's vice president-Australia LNG, said in a release.

ExxonMobil owns a 25 percent stake in Gorgon. Royal Dutch Shell owns 25 percent while Chevron, the operator of the project, owns a 50 percent share. Chevron has not yet officially signed off on the project, but ExxonMobil said a final investment decision is anticipated later this year.

A major hurdle for the project was cleared on Monday when the governments of Australia and the state of West Australia agreed to cover costs for capturing and storing carbon emissions from Gorgon. The Australian government is expected to decide on final environmental approvals for Gorgon before Sept. 8.

More than 10 LNG projects are currently under development in Australia by a number of the world's top energy giants. "Australia's stable political system, vast energy reserves and proximity to energy hungry markets in Asia have made it a favored development destination for the big oil and gas groups," the Financial Times reported Wednesday.

The deal comes on the heels of tension between China and Australia over the arrest of Rio Tinto Executive Stern Hu and the visit to Australia by Uighur leader Rebiya Kadeer.

"The long-term interests of the two countries will always trump the occasional crisis," said Michael McKinley, professor of global politics at the Australian National University in Canberra, Bloomberg reports. "China's interest is in obtaining resources at the right volume and price and it's able to do so in Australia."

Last week India's Petronet also signed a deal with ExxonMobil for LNG from Gorgon worth more than $20.5 billion.