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

ConocoPhillips plans further capex reduction for deepwater exploration

07/16/2015 ConocoPhillips reported plans to further reduce its capital expenditures for deepwater exploration, with the “most significant reductions” coming f...

DOE official: LNG exports could be limited by silt-clogged waterways, ports

07/16/2015 Silt, which is increasingly filling US waterways and ports, potentially could limit US LNG exports if it is not dredged soon, a top US Department o...

Fitch notes increase in energy-default rate

07/16/2015 Recent actions of two exploration and production companies have pushed the trailing 12-month energy default rate among issuers of high-yield bonds ...

ENOC trims Turkmen plan in Dragon takeover

07/16/2015 Emirates National Oil Co. Ltd. (ENOC), Dubai, will lower target oil production from the Cheleken area offshore Turkmenistan after acquiring full co...

KMI to buy Shell’s stake in Elba LNG project for $630 million

07/16/2015 Kinder Morgan Inc., Houston, has reached a deal with Royal Dutch Shell PLC to purchase 100% of Shell’s equity interest in Elba Liquefaction Co. LLC...

Genesis to buy Enterprise offshore pipelines

07/16/2015 Genesis Energy LP has agreed to buy the Gulf of Mexico pipelines and services business of Enterprise Products Partners LP for $1.5 billion cash.

CAPP: Canada needs global LNG markets for gas production growth

07/16/2015 Canada needs to connect to global LNG markets to avoid a decade of decline in natural gas production, according to the Canadian Association of Petr...

KMI brings second Texas condensate splitter online

07/15/2015 Kinder Morgan Inc., Houston, has commissioned the second of two splitters at the company’s new petroleum condensate processing facility located nea...

Michigan DEQ report urges ban of heavy oils in Mackinac Straits pipeline

07/15/2015 Michigan’s Department of Environmental Quality’s Petroleum Pipeline Task Force issued a report that recommended that heavy crude and oil sands be k...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

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
Available Webcasts


Operating a Sustainable Oil & Gas Supply Chain in North America

When Wed, Oct 7, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.

register:WEBCAST


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


Emerson Micro Motion Videos

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