Flow-on effect from gas deal

REVENUE from the North-West Shelf joint venture deal to supply three million tonnes a year for 25 years to LNG China’s pilot Guangdong LNG project is not expected before 2006.

However, the benefits to the State, including business confidence across a number of sectors, are expected to flow well before then.

Australia China Business Council WA president Desmond Williams said closing the deal would give Australians confidence in doing business with China.

China had traditionally been considered a difficult marketplace, and closure on such a large deal would overcome much of the previous negative feeling regarding doing business there.

Australian Petroleum Production and Exploration Association WA and NT director James Pearson also hailed the NWS success. China’s presence in the Australian LNG market should be viewed positively for other developments in both WA and the NT, Mr Pearson said.

The China project was a re-affirmation that gas was the most greenhouse friendly of all fossil fuels and a competitive form of energy, he said, and this threw out a challenge for the commercialisation of significant reserves off the State’s coast. Further, the bipartisan political support behind the successful bid augured well for the future.

Both APPEA and the ACBC are hoping for change from this success.

The petroleum industry continued to contribute handsomely to State and national revenue, but the State Government needed to ensure it could successfully marry environmental, conservation and approvals policies to adequately support development and encourage investment, Mr Pearson said, while the Federal Government needed to provide appropriate fiscal certainty.

The challenge for the Federal Government, Dr Williams said, was to make business visa access easier and rapid, to facilitate opportunities between China and WA.

The ACBC also hoped both the Federal and State Governments would increase support to help businesses create opportunities.

Rob Millhouse, spokesperson for NWS joint venture operator Wood-side Energy, confirmed the venture would now seriously look at developing other reserves in addition to the Goodwyn, Rankin and Perseus fields, including Keast and Angel.

NWS joint venture partner Chevron Texaco has been ramping up preparations for the development of the (estimated) 21 trillion cubic feet Gorgon gas fields.

Chevron Texaco spokesperson Peter Coghlan said any sale of gas from Australia to South-East Asia would reinforce opportunities for Gorgon, independently marketing to China, South Korea, Taiwan and Japan.

In the meantime, the NWS joint venture partners will look at how best to supply the LNG, when to build a fifth LNG production facility (train) – underpinned by the contract – and how big this will be.

Mr Millhouse said land access negotiations and some site works had already been undertaken to accommodate this next train.

The project’s second trunk line would be in place, and the company anticipated using the workforce currently constructing the fourth train.

This accounted for the estimated cost of $1 billion, compared with $2.5 billion for train four.

A joint venture, with Chinese shipping companies COSCO and China Merchants, to provide two or three LNG ships to service the Guangdong contract, is part of the supply deal.

However, it is yet to be determined which NWS joint venture partners will want to participate in this joint venture.

Another matter to sort out is the proposed new joint venture to facilitate the LNG supply and to accommodate Chinese energy company Chinese National Offshore Oil Corporation’s membership.

In addition to Woodside Energy, the NWS joint venture partners are BHP Billiton Petroleum (NWS), BP Developments Australia, Chevron Texaco Australia, Japan Australia LNG (MIMI), and Shell Development (Australia).

The WA petroleum industry supplies almost $500 million to the State each year in royalties.



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