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Lloyds List: Woodside's shares rocket as firm agrees north Asia LNG supply deal: Tim Warren, chairman of the Shell Companies in Australia, said the project still hinged on resolving regulatory and fiscal issues but remained a priority amid strong demand for liquefied natural gas.: Friday December 09, 2005

 

Deal involves combined sales of 3.5m-4m tonnes a year for 15 years, with Japan, South Korea and Taiwan thought to be likely customers, writes Tony Gray

 

WOODSIDE Petroleum of Australia has agreed key commercial terms with north Asian customers for the long term supply of liquefied natural gas from its Pluto field in Western Australia.

 

The news hoisted the company's shares to a record level.

 

Woodside said the terms covered combined sales of between 3.5m and 4m tonnes of LNG a year for 15 years, with an option to extend for a further five years from the end of 2010.

 

Heads of agreements were due to be signed over the next few months with sales and purchase agreements to be negotiated by the end of next year.

 

'These agreements will be conditional on a final investment decision by Woodside in 2007,' the company said.

 

Woodside gave no details about prices or the names of the customers which the company indicated would prefer to remain confidential at this stage.

 

However, it is believed that buyers in Japan and South Korea, the two largest importers of LNG, are involved as well as possibly Taiwan.

 

China is not thought to be a contender because it is still assessing the impact of rising LNG demand on prices.

 

Pluto LNG director Lucio Della Martina said discussions were also progressing with potential customers in the US.

 

Surprisingly, in view of the extra distance involved, one report suggested these customers were on the US east coast rather than the west, because LNG import terminal projects there were at a more advanced stage.

 

When Woodside revealed the 100%-owned Pluto project earlier this year, the company said it would involve a 5m-7m-tonnes-a-year plant.

 

The project is particularly important to Woodside, operator and one-sixth shareholder in the existing North West Shelf LNG project, because it is wholly-owned.

 

Woodside's equity share of processing capacity from Pluto is potentially more than double that from the North West Shelf of 2.7m tonnes a year, including a fifth train under construction.

 

- Partners in the Greater Sunrise gas field, which has been dogged by disputes, have been heartened by an agreement between Australia and East Timor on sharing the revenues from the project.

 

Operator Woodside Petroleum welcomed the resolution of the maritime boundary dispute in the Timor Sea but noted that the agreement still needed to be formally signed by both parties and then ratified.

 

'The future of the Sunrise gas project remains dependent on several factors, including the fiscal regime under which it would operate, the cost and location of any development and the successful marketing of the resource,' the company said.

 

Shell, a shareholder with 26.56%, also said the agreement was encouraging for the project's development.

 

Tim Warren, chairman of the Shell Companies in Australia, said the project still hinged on resolving regulatory and fiscal issues but remained a priority amid strong demand for liquefied natural gas.

 

'I have no doubt we can commercialise everything we have got providing we can get moving soon enough,' he said.

 

ConocoPhillips and Osaka Gas are also shareholders in the project. 

 

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