Australia's Northwest Shelf venture, operated by a group of companies led by Woodside Petroleum, has been awarded a contract to supply China's first liquefied natural gas terminal in Shenzhen, Guangdong province. The 25-year contract is due to start in 2005 and will involve the supply of 3m tonnes of LNG annually. Australia's Prime Minister John Howard described the deal, valued at about US$500m-US$600m a year, as the largest ever won by the country. The terminal is controlled by China National Offshore Oil Co.
Other shareholders in the Northwest Shelf are Royal Dutch/Shell, ChevronTexaco, BP, BHP Billiton and Japan Australia LNG. In return for awarding the contract to Australia, CNOOC will take a 25 per cent equity stake in up to 4m tonnes of gas reserves a year at Northwest Shelf for a period of 25 years, said BHP Billiton.
BP and Exxon Mobil were the two big multinational oil companies to lose out in the decision to award the contract to Australia. According to Xinhua, CNOOC had been advised that BP Indonesia would be awarded a supply deal for a smaller LNG terminal in 7 Fujian province. However, a senior official at CNOOC said that such an announcement was premature.
China is investing heavily in LNG to reduce its dependence on coal for its power needs. It hopes gas will provide about 8 per cent of the power mix by 2010, which would make China the world's fastest-growing LNG market over the current decade.
Three power plants are to be built in Guangdong and supplied with gas from the province's LNG terminal, said a regional government official. One will be built in Huizhou and the other two in western Shenzhen, near the LNG terminal. Each plant will have three generators, with a total capacity of 1,000MW per plant.