Australia and China sign largest gas pact
Australia and China struck their biggest trade deal ever on Tuesday, as the world's two most valuable listed oil companies, Exxon Mobil Corp and PetroChina, reached a $41 billion liquefied natural gas (LNG) agreement.
'It's a statement about the nature of our two economies and the fact that Australia is important to China, just like China is important to Australia,' Australian Resources Minister Martin Ferguson told Reuters in Beijing.
Exxon will supply the LNG from the massive A$50 billion Gorgon LNG project on Australia's northwest coast, which is expected to have an output of 15 million tonnes per annum (mtpa) at its peak.
Chevron Corp is the operator of the project with a 50 percent stake, while Exxon and Royal Dutch Shell Plc each own a 25 percent stake.
The agreement with PetroChina follows Exxon's A$10 billion ($8.26 billion) deal with India's Petronet and means that buyers have now been found for Exxon's entire share in the Gorgon.
As part of the pact, PetroChina will become the largest buyer of gas from Gorgon, receiving 2.25 mtpa of gas from the project for 20 years. That is on top of PetroChina's previous 20-year agreement signed with Shell for 1 mtpa.
The latest deals, along with the regulatory approvals process from the Australian federal government now nearing completion, mean that all of the Gorgon partners could officially approve the massive project as early as next month.
'The A$50 billion contract to supply PetroChina is a foundation contract that will assist in getting the Gorgon LNG project to final investment, and that again would represent the biggest stand-alone project in Australia's history,' said Ferguson.
Ferguson said China has given the necessary approvals to the deal and the project is expected to start producing gas in 2015. He said he does not expect any political opposition at home either.
China currently has two operating LNG terminals -- Dapeng and Fujian -- with the capacity to import over 6 mtpa of LNG. The aim is to increase that amount to 50 mtpa by 2020, overtaking Spain to become the world's third largest LNG importer.
A source with Chevron said the company is in talks to supply a similar volume of Gorgon LNG to PetroChina's smaller rival, CNOOC.
CNOOC's Dapeng terminal already imports gas from the North West Shelf project in Australia, and preliminary deals have also been signed for supply from various proposed Australian projects to terminals under construction in China.
China's gas consumption is set to nearly triple over the next 10 years, potentially rising to around 18 billion cubic feet per day by 2020 and making the country the world's No. 3 gas market after Russia and the United States.
'It's a statement about the nature of our two economies and the fact that Australia is important to China, just like China is important to Australia,' Australian Resources Minister Martin Ferguson told Reuters in Beijing.
Exxon will supply the LNG from the massive A$50 billion Gorgon LNG project on Australia's northwest coast, which is expected to have an output of 15 million tonnes per annum (mtpa) at its peak.
Chevron Corp is the operator of the project with a 50 percent stake, while Exxon and Royal Dutch Shell Plc each own a 25 percent stake.
The agreement with PetroChina follows Exxon's A$10 billion ($8.26 billion) deal with India's Petronet and means that buyers have now been found for Exxon's entire share in the Gorgon.
As part of the pact, PetroChina will become the largest buyer of gas from Gorgon, receiving 2.25 mtpa of gas from the project for 20 years. That is on top of PetroChina's previous 20-year agreement signed with Shell for 1 mtpa.
The latest deals, along with the regulatory approvals process from the Australian federal government now nearing completion, mean that all of the Gorgon partners could officially approve the massive project as early as next month.
'The A$50 billion contract to supply PetroChina is a foundation contract that will assist in getting the Gorgon LNG project to final investment, and that again would represent the biggest stand-alone project in Australia's history,' said Ferguson.
Ferguson said China has given the necessary approvals to the deal and the project is expected to start producing gas in 2015. He said he does not expect any political opposition at home either.
China currently has two operating LNG terminals -- Dapeng and Fujian -- with the capacity to import over 6 mtpa of LNG. The aim is to increase that amount to 50 mtpa by 2020, overtaking Spain to become the world's third largest LNG importer.
A source with Chevron said the company is in talks to supply a similar volume of Gorgon LNG to PetroChina's smaller rival, CNOOC.
CNOOC's Dapeng terminal already imports gas from the North West Shelf project in Australia, and preliminary deals have also been signed for supply from various proposed Australian projects to terminals under construction in China.
China's gas consumption is set to nearly triple over the next 10 years, potentially rising to around 18 billion cubic feet per day by 2020 and making the country the world's No. 3 gas market after Russia and the United States.