Financial Times: Gorgon signs to sell LNG to N America: “The deal, worth more than US$10bn over 20 years, is the project's first firm order and would also be Australia's first long-term LNG supply contract to North America.” (ShellNews.net) 12 April 05
By Virginia Marsh in Sydney
Published: April 12 2005
Australia's A$11bn (US$8.5bn) Gorgon oil and gas project has reached a landmark agreement to sell liquefied natural gas to North America, bringing the ambitious project a step closer to realisation.
The deal, worth more than US$10bn over 20 years, is the project's first firm order and would also be Australia's first long-term LNG supply contract to North America.
Royal Dutch/Shell said it would set aside capacity at a new LNG terminal in north-western Mexico for its share of the gas from Gorgon. The terminal in Baja California, 50 per cent owned by Shell, is under construction and will be the first of its kind on the west coast. First deliveries from Gorgon could begin in 2010.
The agreement, which will involve up to 2.5m tonnes of LNG a year, means the development of Gorgon, which has estimated reserves of 40,000bn cubic feet and is set to be Australia's biggest industrial project, is almost certain to proceed.
The owners of the Greater Gorgon fields, Chevron-Texaco, the operator with 50 per cent, and Shell and Exxon Mobil, with 25 per cent each, are due to make a final investment decision by the middle of next year.
They are also in advanced negotiations with the China National Offshore Oil Corporation over a larger gas supply contract that would involve the Chinese taking an equity stake in Gorgon of about 12.5 per cent.
Under a preliminary agreement signed in October 2003 and which had been due for completion by the end of last year, Gorgon would supply up to 100 tonnes of LNG to China under a 25-year contract, worth about A$30bn.
That agreement followed China's decision in 2002 to award its LNG supply contract, worth A$25bn, to the North West Shelf, Australia's biggest existing LNG project, in which ChevronTexaco and Shell also have stakes.
Gorgon said negotiations with CNOOC were continuing and it hoped the two sides could come to agreement in the near future.
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