China, Australia may seal LNG deals

China and Australia could be finalising two gas sales agreements this week, according to regional media reports.

Chinese President Hu JinTao, who is arriving in Sydney for the APEC leaders' summit this evening, will be witnessing the signing of preliminary agreements for gas supply from the Shell-operated Gorgon project and the Woodside-operated Browse basin project, according to The Australian newspaper.

Shell would be supplying three million tons of gas from its 25 percent share of Gorgon LNG to CNOOC's terminal in Ningbo, Zhejiang, while Woodside Petroleum would be exporting gas on a long-term basis to PetroChina's 3.5-ton LNG terminal in Rudong, Jiangsu Province, according to an Interfax news report.

The agreement between Shell and CNOOC, if finalised, will mark a closure to more than two years of negotiation and tussle over the gas pricing between the Gorgon partners and the Chinese company. Negotiations between the Gorgon partners and CNOOC broke down after the partners, led by project operator and stakeholder Chevron, failed to reach agreement with the Chinese.

Chevron since elected to divert the LNG sales away from CNOOC to three Japanese utilities companies, while Shell had previously planned to market its full 25 per cent share to the United States though Sempra's Energma Costa Azul terminal in Baja California, Mexico.