China Signs $40 Billion Australian Gas Deal
March 29, 2010
Australia''s biggest gas export deal was announced between Britain''s BG Group and China National Offshore Oil Corporation for the sale of 3.6 million tons of liquid natural gas each year for the next 20 years. The deal is worth about $40 billion based on a crude oil price of $70 per barrel, said Frank Chapman, chief executive of BG Group, following the signing ceremony in Beijing, China Daily reports. BG has cooperated with state-owned CNOOC on other projects for almost four years. Under the terms of parallel agreements between the two companies, CNOOC, one of China''s largest offshore oil and gas producers, will acquire a 5 percent stake in certain BG gas reserves in the Surat Basin in Queensland, with a book value of about $270 million. CNOOC will also become a 10 percent equity investor in an LNG train and join BG in a consortium to build two LNG ships. The deal represents the world''s first fully termed sale and purchase agreement for the supply of LNG from coal seam gas. Geosciences Australia estimates Queensland has enough coal seam gas to power the entire Australian state for more than 1,000 years. Natural gas accounted for approximately 3 percent of China''s total energy consumption last year, with the government planning to raise that level to 5 percent this year.