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)
March 24 (Bloomberg) -- China National Offshore Oil Corp.
will buy liquefied natural gas from BG Group
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
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
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.
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
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.
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
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,
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.
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:
in Sydney at