Exxon, China sign $41 billion Australian gas deal
Reuters reports that Australia and China have struck their biggest trade deal, as the world''s two most valuable listed oil companies, Exxon Mobil Corp and PetroChina, reached a $41 billion liquefied natural gas agreement. Exxon will supply LNG from the massive A$50 billion Gorgon LNG project on Australia''s northwest coast, which is expected to have an output of 15 million tons per year at its peak. Chevron Corp. is the operator of the project with a 50 percent stake, while Exxon and Royal Dutch Shell Plc each own a 25 percent stake. The agreement with PetroChina follows Exxon''s A$10 billion ($8.26 billion) deal with India''s Petronet and means that buyers have now been found for Exxon''s entire share in the Gorgon. It comes at a time of trade and political tension between China and Australia and as China looks to soak up raw materials and energy supplies to fuel growth. As part of the pact, PetroChina will become the largest buyer of gas from Gorgon, receiving 2.25 mtpa of gas from the project for 20 years. That is on top of PetroChina''s previous 20-year agreement signed with Shell for 1 mtpa. With the regulatory approval process nearing completion in Australia, all of the Gorgon partners could officially approve the massive project as early as next month. China''s gas consumption is set to nearly triple over the next 10 years, potentially rising to around 18 billion cubic feet per day by 2020 and making the country the world''s No. 3 gas market after Russia and the United States. Most of that demand will come from domestic production, but given an expected government-driven rise in domestic gas prices soon, LNG could become an attractive alternative. With a long list of around a dozen proposed LNG projects in the Asia-Pacific region, buyers are also eager to lock in supplies as quickly as possible from projects that are most likely to be developed.