Woodside Petroleum Ltd., Australia’s second-largest oil producer, may reach an initial agreement to supply liquefied natural gas from its Browse project to China by the end of 2010, the head of its China unit said.
“We are currently in detailed discussion with Chinese state-owned companies about LNG supply and we are interested to reach key terms in the next few months or even by the end of the year,” George J. Gilboy, general manager for the Greater China Region, said in an interview in Shanghai yesterday.
Chinese energy companies are building LNG terminals as part of the government’s plan to use more of the cleaner-burning fuel. Woodside has supplied 3 million metric tons of the fuel a year since 2006 to China National Offshore Oil Corp.’s terminal in the southern province of Guangdong, the nation’s first.
“Australia will be a big partner for China’s LNG development as Chinese companies know Australia is special to them,” Gilboy said. “They understand the advantages of Australia in terms of geography, political stability, transparency of laws and fair dealing with partners.” He declined to give details of the negotiations or identify the Chinese partner.
Separately, talks with PetroChina Co. on LNG supply are continuing even after an agreement lapsed, Gilboy said.
“PetroChina is interested in development in Australia and it is a very important company in China’s energy market and we like to work with PetroChina in future,” he said.
Woodside’s preliminary agreement to supply as much as 3 million tons of LNG a year from the Browse project to the Chinese company, valued at about A$45 billion ($44 billion), expired last year.
Woodside and partners Chevron Corp., Royal Dutch Shell Plc, BP Plc and BHP Billiton Ltd. in February opted to process the fuel at a hub in the Kimberley region of Western Australia after accepting a government deadline to decide how to develop the Browse venture. A final investment decision for Browse is due in 2012.
The Browse fields, off Western Australia, are estimated to contain 13 trillion cubic feet of sales gas and 355 million barrels of condensate, a type of light oil, Macquarie Group Ltd. said in a client note Feb. 25.
CPC Corp., Taiwan’s state-owned oil refiner, extended a preliminary agreement to buy LNG from Browse venture to the end of this month and wants to acquire as much as 10 percent of the project, Vice-President Lin Maw-Wen said in January.
“We still aim to finalize the CPC contract. For the agreement, we don’t worry too much about speculation on the deadline,” Gilboy said. “What we really care about is both parties are interested to continue to make progress to finalize the deal.”
CPC is also keen to import condensate from Browse and discussions with the Taiwan company extend beyond LNG, he said, without giving details.
China will need about as much as 50 million tons a year of LNG by 2020, which means they will have to buy 15 million to 20 million tons above current contracted supplies, Gilboy said.
“Woodside is developing several projects to meet the demand and Browse is exactly the project to meet it,” he said.