AN initiative led by the Asia Research Centre at Murdoch University, in league with Beijing’s Energy Research Institute, appears to be paying dividends for Australia, in particular the North West Shelf LNG project.
AN initiative led by the Asia Research Centre at Murdoch University, in league with Beijing’s Energy Research Institute, appears to be paying dividends for Australia, in particular the North West Shelf LNG project.
Competition has intensified in the global gas industry after two years of multinational energy sector mergers, against a background of large emerging markets and global attempts to regulate environmental responsibility.
With Chinese economic growth forecast to continue at 7 per cent in contrast with weakening worldwide economies, and its entry to the World Trade Organisation, the stakes to supply Australian LNG to China are high.
Aware of opportunities to tender for gas industry contracts in China, the ARC convened a network of industry and government players to sponsor and determine the terms of reference for a report on China’s energy policy, including political and economic influences.
The venture, however, has gone much further than this, from a desire by all players to develop comfortable industry relationships between both countries, and has raised the profile of Australian LNG in China.
Last month’s invitation for the North West Shelf LNG venture to tender for the Guangdong gas supply, indicates significant success with the profile strategy.
Although facing stiff competition from projects in Malaysia, Qatar, Russia, Indonesia, Yemen and Iran, the opportunity to be shortlisted is considered significant.
Just last week the NWS partners and 70 per cent government owned Chinese oil company CNOOC also announced a plan for CNOOC to take some equity in the NWS LNG pro-ject if the venture is the successful tenderer.
CNOOC has multiple interests in four Chinese oil and gas production regions and one of these, the Hainan province, has recently reported significant new gas reserves.
China’s move towards establishing natural gas infrastructure, in particular its first LNG project, an import facility and pipeline at Guangdong has prompted intense interest in the region.
BP took the first prize, as part of a consortium earlier this year winning the construction tender for the Guangdong receiving terminal. However the multinational has other major interests in China – it maintains a retail fuel network in Zhejiang province and has chemical interests in southern China – and is one of the tenderers, through a Malaysian project, for the Guangdong supply contract.
Other large multi-nationals are also in the region, with ChevronTexaco and Agip in a joint venture with CNOOC, also in southern China.
The NWS venture will know by early 2002 if it has made the shortlist of two or three players for the final stage where commercial negotiations begin in earnest on a 25-year contract for the supply of three million tonnes of LNG per year.
The Chinese expect to make a final supply decision by the middle of next year and if successful, Australia’s first LNG supply to China will commence by the end of 2005.
Australia LNG vice-president Lou Montilla said the ARC study, supported by ALNG, the Federal Department of Industry Science and Resources, the WA Department of Mineral and Petroleum Resources, Woodside Energy and the Northern Territory Office of Resource Development had not just produced a valuable independent research report, but had forged broader Australian relationships with China.
Apart from appropriate pricing, the Chinese will be looking for political stability, security of supply and good relationships with its LNG supplier, Mr Montilla said.
The research initiative, which included visits by economists from China’s Energy Research Institute, has meant Australia can be viewed not just as a supplier of LNG, but as a potential long-term business partner, he said.
Woodside commercial adviser Richard Tasker said the project gave the NWS partners the opportunity to work with the Chinese research community, and the resulting report, in the broader terms of how China’s energy policy was determined, had produced a valuable look at the energy market.
CNOOC also has a memorandum of understanding with Chevron for equity in the Gorgon gas reserves south of the NWS venture.
Competition has intensified in the global gas industry after two years of multinational energy sector mergers, against a background of large emerging markets and global attempts to regulate environmental responsibility.
With Chinese economic growth forecast to continue at 7 per cent in contrast with weakening worldwide economies, and its entry to the World Trade Organisation, the stakes to supply Australian LNG to China are high.
Aware of opportunities to tender for gas industry contracts in China, the ARC convened a network of industry and government players to sponsor and determine the terms of reference for a report on China’s energy policy, including political and economic influences.
The venture, however, has gone much further than this, from a desire by all players to develop comfortable industry relationships between both countries, and has raised the profile of Australian LNG in China.
Last month’s invitation for the North West Shelf LNG venture to tender for the Guangdong gas supply, indicates significant success with the profile strategy.
Although facing stiff competition from projects in Malaysia, Qatar, Russia, Indonesia, Yemen and Iran, the opportunity to be shortlisted is considered significant.
Just last week the NWS partners and 70 per cent government owned Chinese oil company CNOOC also announced a plan for CNOOC to take some equity in the NWS LNG pro-ject if the venture is the successful tenderer.
CNOOC has multiple interests in four Chinese oil and gas production regions and one of these, the Hainan province, has recently reported significant new gas reserves.
China’s move towards establishing natural gas infrastructure, in particular its first LNG project, an import facility and pipeline at Guangdong has prompted intense interest in the region.
BP took the first prize, as part of a consortium earlier this year winning the construction tender for the Guangdong receiving terminal. However the multinational has other major interests in China – it maintains a retail fuel network in Zhejiang province and has chemical interests in southern China – and is one of the tenderers, through a Malaysian project, for the Guangdong supply contract.
Other large multi-nationals are also in the region, with ChevronTexaco and Agip in a joint venture with CNOOC, also in southern China.
The NWS venture will know by early 2002 if it has made the shortlist of two or three players for the final stage where commercial negotiations begin in earnest on a 25-year contract for the supply of three million tonnes of LNG per year.
The Chinese expect to make a final supply decision by the middle of next year and if successful, Australia’s first LNG supply to China will commence by the end of 2005.
Australia LNG vice-president Lou Montilla said the ARC study, supported by ALNG, the Federal Department of Industry Science and Resources, the WA Department of Mineral and Petroleum Resources, Woodside Energy and the Northern Territory Office of Resource Development had not just produced a valuable independent research report, but had forged broader Australian relationships with China.
Apart from appropriate pricing, the Chinese will be looking for political stability, security of supply and good relationships with its LNG supplier, Mr Montilla said.
The research initiative, which included visits by economists from China’s Energy Research Institute, has meant Australia can be viewed not just as a supplier of LNG, but as a potential long-term business partner, he said.
Woodside commercial adviser Richard Tasker said the project gave the NWS partners the opportunity to work with the Chinese research community, and the resulting report, in the broader terms of how China’s energy policy was determined, had produced a valuable look at the energy market.
CNOOC also has a memorandum of understanding with Chevron for equity in the Gorgon gas reserves south of the NWS venture.
