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While CNOOC stalls on committing to Gorgon, two Japanese buyers – Tokyo Gas and Chubu Electric – have struck cornerstone deals with Gorgon operator and 50% stakeholder Chevron Australia.
Tokyo Gas will take 1.2 million tonnes per annum, while Chubu will take 1.5mtpa from first gas in 2010. This total of 2.7mtpa is more than half of Chevron’s 5mtpa share of Gorgon production. Both Japanese companies are considering taking equity in the project.
Shell Australia, a 25% customer, has already committed its 2.5mtpa to the North American market via its own LNG terminal in Baja California, Mexico. The other 25% partner, ExxonMobil has not yet made any announcements regarding its share of the LNG.
CNOOC is still seeking a lower price for Gorgon gas than any of the partners are willing to accept. The prices paid by the Japanese customers are reportedly a third higher than CNOOC’s offer.
China has not secured any new LNG contracts since two big deals in 2002, casting a cloud over the up to 18 new import terminals in the works or being considered.
Earlier this month, Australian industry and resources minister Ian Macfarlane warned China it was risking missing out on further Australian LNG deals if it did not sign up soon.
“It is hard to see there will be gas sold in the short term at the sort of prices we saw three or four years ago,” Macfarlane said in an interview during his recent visit to Beijing.
He urged buyers seeking LNG to "talk to companies that have gas assets in Australia".
But numerous Asian media reports indicate that China is willing to increase its use of coal in the medium-term and is betting that LNG prices will fall in the long term.
However, the big players in the Australian LNG industry believe high prices will be sustained and LNG will remain a sellers market.
The Japanese seem to agree with the Australians. Chevron marketing manager Neil Theobald told the Australian newspaper that Japanese customers were eager to secure Gorgon gas, and the marketing team from Woodside’s Pluto LNG project have also reported keen interest in Japan.
