QUEENSLAND'S emerging coal seam gas industry has received a $60 billion boost from China with the official signing of Australia's largest liquefied natural gas deal. Britain's BG Group and China National Offshore Oil Corp yesterday sealed a deal announced last May for the supply of 3.6 million tonnes of LNG per annum to CNOOC for 20 years. The deal takes the value of binding LNG sales secured by Australian projects in the past year to more than $500bn. The agreement for the supply of LNG from BG's proposed Queensland Curtis LNG project at Gladstone, beginning in 2014, was yesterday hailed as the world's first fully termed sales and purchase agreement for LNG sourced from coal seam gas.
"These agreements are a landmark development in the relationship between our two companies, building on what is already a close and productive partnership in deepwater exploration offshore China," BG Group chief executive Frank Chapman said. Resources and Energy Minister Martin Ferguson, in Beijing for the signing, said that in volume, the deal was the biggest single company-to-company LNG contract in Australian history, totalling 72 million tonnes over 20 years. "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," he said. BG's LNG deal, estimated to be worth about $60bn, follows a string of major deals between producers and key customers from China and Japan.
Chevron's $90bn deal with Tokyo Electric Power -- for the annual delivery of 4.1 million tonnes of LNG for up to 20 years from Wheatstone -- is the largest to date. However, the deal is only a heads-of-agreement and has not yet been made binding. Australia's largest trade deal to date was ExxonMobil's $50bn sales contract with PetroChina, signed in August last year, for the supply of LNG from the massive Gorgon project in Western Australia. BG's deal will also see CNOOC buy an interest in BG's coal seam gas resources in Queensland's Surat Basin and become an equity partner in one of the two LNG trains at Gladstone.
Chinese investment in Australian resources has been the centre of heated debate over the past year, with concerns about state-owned entities acquiring assets, but Mr Ferguson was keen yesterday to point out the importance of China to Australia. "Resources are the backbone of Australia's trading relationship with China," he said. "Australia is committed to strengthening that relationship and being an important partner in our region's economic growth."
He highlighted that in 2008-09, more than $26bn of Chinese investment was approved in the Australian resources sector. "Just as the Japan-Australia trade and investment relationship matured and grew into a lasting friendship over the last 50 years, so will the China-Australia relationship," he said.
Author: Sarah-Jane Tasker
