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Msg  4460 of 13357  at  3/24/2010 8:32:38 AM  by


The LNG deals just keep on coming...

 I'm sure the sharks from India and China are swimming  around IOC eyeing each other  given the opportunity for them to secure long term cheap supplies of energy, billions of people to feed (think petrochemicals and fertilizer), to keep warm and to provide transportation fuel to. 

BG Group, China Sign Australia’s Biggest LNG Deal (Update2)

By Ben Sharples

March 24 (Bloomberg) -- China National Offshore Oil Corp. will buy liquefied natural gas from BG Group Plc’s Queensland Curtis venture in Australia’s largest export deal for the fuel.

The companies signed an agreement in Beijing today to supply 3.6 million metric tons of LNG annually over 20 years starting 2014, Australian Energy Minister Martin Ferguson said in a statement. The value of the deal would fluctuate with the price of crude oil, and be $40 billion at $70 a barrel, BG Chief Executive Officer Frank Chapman said.

The transaction compares with the A$50 billion ($46 billion) contract PetroChina Co. signed with Exxon Mobil Corp. in August to buy 2.25 million tons annually from the Chevron Corp.-led Gorgon LNG venture. The deal underscores growing trade links between the two countries even as China’s trial of four Rio Tinto Group iron ore executives strains political ties.

“China’s energy demand is growing strongly,” said John Young, an analyst at Wilson HTM Investment Group in Melbourne. “It’s across a range of energy sources from coal, gas, oil and nuclear. Four percent of China’s energy demand is met by gas and that’s projected to increase to about 10 percent.”

Ferguson said the contract is the biggest company-to- company LNG deal done in Australia in volume terms.

The value of the deal could be as high as $80 billion, a BG official said. Oil futures in New York have averaged $78.63 a barrel this year and crude for May delivery traded at $80.60 at 10:42 a.m. London time.

Chinese Acquisitions

BG advanced as much as 1.7 percent in London and traded down 0.1 percent at 1,174 pence at 10:44 a.m. Shares in Cnooc Ltd., China National’s Hong Kong-listed unit, rose 0.7 percent to close at HK$12.46.

Chinese companies spent a record $32 billion on mining and energy acquisitions last year, securing oil fields, coal and metal mines in Africa, Asia and Australia to feed the world’s fastest-growing major economy. Gas producer Arrow Energy Ltd. this week accepted a A$3.5 billion joint takeover offer from Royal Dutch Shell Plc and PetroChina.

BG will supply fuel to China National Offshore using gas extracted from Queensland coal seams and converted by BG unit QGC to liquid for export by ship. The supply pact was first announced in May.

“This deal makes Australia the world leader in the coal- seam-gas-based LNG industry and it brings us one important step closer to opening up a new LNG province on Australia’s east coast in Queensland,” Ferguson said.

Project Costs

China wants to triple the use of cleaner-burning gas to about 10 percent of energy consumption by 2020 to cut reliance on more-polluting coal. China National Offshore has so far signed term contracts to import about 16 million tons of LNG a year, President Fu Chengyu said today.

BG, the U.K.’s third-largest oil and gas producer, plans to build an LNG plant with first-phase capacity of 7.4 million tons a year from two processing units near Gladstone on the central Queensland coast, according to the Web site of the Reading, England-based company.

Deutsche Bank in a report this month estimated the cost of Curtis LNG at A$20.1 billion, and said a final investment decision is expected in the middle of this year. BG’s project is one of five coal-seam-gas-to-LNG ventures proposed at Gladstone and among more than 12 LNG ventures intended for Australia and Papua New Guinea targeting Asian demand for fuels that pollute less than coal and oil.

LNG Stake

China National will gain a 10 percent stake in the Curtis plant’s first LNG processing unit, and will reimburse BG for 10 percent of the train’s development costs, BG said today. The Beijing-based company will also acquire 5 percent of some BG gas fields in Queensland, assets valued at $270 million. A final investment decision is expected this year, BG said.

The companies will build and own two LNG ships in China, according to BG.

China National Offshore operates three LNG terminals in Guangzhou, Fujian and Shanghai and is building a fourth in Zhejiang, according to the company’s Web site.

Coal-seam gas is mostly methane found on the surface of coal and can be extracted by reducing pressure on the seams, usually by removing water. LNG is gas chilled to liquid form for transport by ship to destinations not connected by pipeline.

Chinese companies have spent at least $13 billion on energy acquisitions in the last two years. China produced 76 billion cubic meters of gas and used 81 billion cubic meters in 2008, according to BP’s Statistical Review.

Imports, Rio Tinto

China’s annual gas imports, including LNG via ocean-going tankers, will exceed 135 billion cubic meters by 2020, according to Center for Energy Strategy Studies in Beijing. The country aims to cut the share of coal in its energy mix to 60 percent by 2020 from 70 percent.

Australian citizen Stern Hu, and his Rio Tinto colleagues Liu Caikui, Wang Yong and Ge Minqiang were charged with bribery and infringing commercial secrets. The trial, which has frayed relations between Australia and China, ended today after a closed-door session, lawyer Zhai Jian, who represents Ge, told reporters in Shanghai. No verdict was given at the end of the proceedings, Zhai said.

To contact the reporter on this story: Ben Sharples in Sydney at


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Msg # Subject Author Recs Date Posted
4462 Re: The LNG deals just keep on coming... ArtM72 0 3/24/2010 9:32:54 AM
4481 Re: The LNG deals just keep on coming... sluicer 4 3/25/2010 3:34:04 PM

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