Guangdong LNG, NWS partners sign sales, purchase agreements

By OGJ editors

HOUSTON, Nov. 22 -- China's first LNG project, which involves the construction of an LNG import terminal and high-pressure gas pipelines, got a boost Monday when the North West Shelf (NWS) venture participants signed agreements with the Guangdong LNG project companies for the purchase and supply of LNG from the NWS in Western Australia.

The agreements signed by the six NWS LNG sellers cover the supply of 3.3 million tonnes/year of LNG in Phase I of the Guangdong LNG project for 25 years starting in late 2005. The contract is valued at $20-25 billion (Aus.).

"The occasion marks the beginning of the North West Shelf's commercial relationship with the Chinese LNG project proponents and a new phase of supply of NWS LNG to China," said BHP Billiton Pres. and CEO Philip Aiken, the NWS owners' representative for the deal.

New construction
In China, under Phase I of the Guangdong construction project in China, the grassroots LNG receiving terminal and regasification plant will be built along with 300 km of pipeline on the eastern side of the Pearl River delta in Guangdong Province. In addition, a lateral will be built to deliver natural gas to Hong Kong.

In addition to the facilities in China, fulfillment of the Phase I contract will require construction of additional LNG processing and a second trunkline from the North Rankin A platform to shore in Western Australia.

Each of three existing processing trains at the Karratha LNG liquefaction plant on the Burrup Peninsula produces 2.5 million tonnes/year of LNG, and construction is under way on a fourth, which alone will have a capacity of 4.2 million tonnes/year of LNG. First LNG from the fourth train is scheduled for mid-2004.

A fifth LNG liquefaction train at Karratha, which will require expenditures of more than $1 billion (Aus.) over 3 years, also is being designed, said John Akehurst, managing director for NWS operator Woodside Energy Ltd. (OGJ Online, Aug. 14, 2002). The facility's fourth LNG train and a second natural gas trunk line from the fields, also under construction, will cost $2.4 billion (Aus.). Completion of the fourth and fifth trains will more than double Karratha's current LNG processing capacity.

Further infrastructure investments are being assessed to supply future opportunities and contractual obligations in Phase II.

Phase II of the China construction, planned to start in 2008, is an extension of the pipeline around the western side of the Pearl River delta. Regasified LNG will be supplied to electric power generation plants and city gate distributors in Guangdong Province and in Hong Kong. Total cost for both phases is $850 million.

In addition, 2-3 new LNG transport vessels will be required to service the China trade route. A fleet of eight LNG ships currently serve the NWS project, with a ninth vessel under construction by Daewoo Corp. in South Korea.

"It is proposed that (NWS) and the Chinese shipping companies, Cosco and China Merchants, will establish a joint venture company to support LNG transport to Guangdong," said Woodside Energy.

"The (sales and purchase) agreements are very important for the overall bilateral relationship between China and Australia, reinforcing Australia's position as a competitive, reliable, and secure supplier of LNG to the Asia Pacific region," Aiken said.

He also said the deal is significant for the future of the NWS companies to supply the Chinese market. "Whether it's iron ore or coal or LNG, the Chinese market is huge and growing and having a strong position early is very important," he said.

BHP Billiton Chairman Don Argus praised both Aiken, who acted as the pivotal link between the commercial negotiating teams, and the political entities—the Commonwealth and Western Australian governments, the Department of Foreign Affairs and Trade, and the project's marketing agent Australia LNG—for their significant roles in bringing the deal to fruition.

"The fact that we had the unshakable support of the government was very important," Argus said.

Shareholders comprising the Guangdong LNG project are: China National Offshore Oil Co. 33%, BP Global Investments Ltd. 30%, and Guangdong entities 31% and Hong Kong parties 6% make up the balance. They are Shenzhen Investment Holding Corp., Guangdong Yuedian Power Assets Managing Co. Ltd., Guangzhou Gas Co., Hong Kong & China Gas Co. Ltd., Hong Kong Electric Holdings Ltd., Foshan Municipal Gas General Co., and Dongguang Fuel Industrial General Co.

NWS partners consist of Perth-based operator Woodside Energy Ltd., BHP Billiton (North West Shelf) Pty. Ltd., BP Developments Australia Pty. Ltd., ChevronTexaco Australia Pty. Ltd., Japan Australia LNG (MIMI) Pty. Ltd., and Shell Development (Australia) Proprietary Ltd.; each currently has a one-sixth share.

As a result of the sales and purchase agreements, CNOOC Ltd., CNOOC's offshore oil and gas producing unit, also will have the opportunity to acquire a participating interest in the (NWS) reserves and production that will supply gas to Guangdong.

Related Articles

Shell cancels Arrow LNG project

01/30/2015

Royal Dutch Shell PLC has abandoned its plans for what would have been a fourth coal seam gas-LNG project at Gladstone in Queensland.

DOE could meet 45-day LNG export decision deadline, Senate panel told

01/29/2015 The US Department of Energy would have no trouble meeting a 45-day deadline to reach a national interest determination for proposed LNG export faci...

Douglas Channel LNG moves toward 2018 startup

01/29/2015 Exmar NV, EDF Trading, and AIJVLP, a joint venture of AltaGas Ltd. and Idemitsu Kosan Co. Ltd., have taken full ownership of the 550,000 tonne/year...

Mitsui charters two more LNG ships for Cameron export project

01/29/2015 Mitsui & Co., Ltd., Tokyo, reports contracts for chartering two new ships to transport LNG to Japan from the Cameron LNG export project in Loui...

US House approves bill aimed at increasing LNG exports

01/28/2015 The US House of Representatives passed a bill aimed at increasing US LNG exports by requiring the Department of Energy to determine whether a proje...

Americans warm up to gas

01/26/2015 As you pick up the latest edition of OGJ after another volatile day in oil and gas, collapse into your favorite chair that's stationed next to your...

Gazprom’s Baltic LNG project to be built in Ust-Luga

01/23/2015 OAO Gazprom has determined that its 10-million-ton Baltic LNG plant will be built near the seaport of Ust-Luga, Leningrad Oblast, Russia. The proje...

Gorgon LNG project signs LNG supply deal with SK Group

01/21/2015 The Chevron Australia-led Gorgon LNG project offshore Western Australia has signed a binding sales and purchase agreement to supply 4.15 million to...

Magnolia LNG signs MOU for fourth train

01/19/2015 Magnolia LNG LLC (MLNG) signed a memorandum of understanding with Kellogg Brown & Root LLC, a wholly owned subsidiary of KBR Inc. (KBR), and SK...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected