ALNG steps up China push

AUSTRALIA LNG is mobilising its commercial, technical and legal resources in an all-out effort to win China’s initial LNG supply contract.

Additional resources have been drawn from both independent and shareholder companies as personnel from the marketing arm for North West Shelf LNG begin weekly visits to the Chinese capital.

An intense five-month negotiation period is under way, with ALNG representatives meeting two weeks ago with Chinese officials to establish processes and timeframes and holding weekly briefings with both the Western Australian and the Federal Governments.

The period will end with a mid-year recommendation to the Chinese Government and the announcement of the winner of a 25-year contract to supply three million tonnes annually to China’s first LNG receiving terminal.

Of far greater value than the initial supply agreement, however, will be the edge to secure further contracts in an expanding Chinese market.

Coastal markets in the Fujian province and around Shanghai are expected to boost annual Chinese demand for LNG to as much as 10 million tonnes by 2010. Further, securing this initial contract will give the NWS venture not only the opportunity to prove reliability to Chinese decision makers, but also the profile to form stronger commercial ties throughout the region.

Current expansion of the NWS project may have been underpinned by Japanese custom, but future development can only be assured by a securing a dominant foothold in a rapidly expanding and highly competitive Asia-Pacific market.

Should these negotiations be ultimately successful, the NWS partners will secure the largest single contract for the venture to date.

However, ALNG’s first job is to ward off stiff competition from the other two finalists for the Guangdong province contract, a BP project in Indonesia and a Rasgas venture in Qatar.

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