Energy

Woodside, China may sign LNG supply deal by end-2010

(Agencies)
Updated: 2010-10-18 17:49

Australia's second-largest oil producer Woodside Petroleum Ltd may strike an initial agreement to supply liquefied natural gas (LNG) to China by the end of 2010, Bloomberg reported on Monday, citing the head of Woodside's China unit.

The company is in detailed discussion with Chinese State-owned companies about LNG supply, and is expected 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, was quoted as saying.

Woodside has supplied 3 million metric tons of LNG annually to China National Offshore Oil Corp's terminal in Guangdong province since 2006, according to Bloomberg.

Related readings:  China expands natural gas network  Woodside Petroleum still in LNG talks with PetroChina  Little impact seen from expired LNG deal  $40b Australia LNG deal lapses

Talks with PetroChina Co on LNG supply are continuing even after an agreement lapsed, Gilboy told Bloomberg. Woodside's preliminary agreement to supply as much as 3 million tons of LNG a year from its Browse project to the Chinese company, valued at about A$45 billion ($44 billion), expired last year.

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 on Feb 25.

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, according to Gilboy.