PetroChina to Buy Up to A$60 Billion of Australia LNG

(Bloomberg) — PetroChina Co. agreed to buy as much as A$60 billion ($49 billion) of Australian liquefied natural gas in two accords signed this week, as China’s demand for the fuel forces it to accept prices that have tripled in five years.

Asia’s biggest oil company by market value would buy as much as 3 million metric tons a year of LNG from Woodside Petroleum Ltd.’s Browse project in Western Australia under an initial agreement, Woodside said today in a statement. The 15-to-20 year accord would start as soon as 2013. PetroChina this week agreed with Royal Dutch Shell Plc to buy LNG from the Gorgon venture.


Global LNG contract prices have been driven higher by increasing demand from power companies for cleaner-burning fuels and delays in supply projects caused by a jump in plant construction costs. China is returning as a customer for Australian LNG five years after a contract signed by China National Offshore Oil Corp. at near record-low prices.

“Woodside wouldn’t be selling the LNG now unless the Chinese had changed their minds on pricing,” said Stuart Baker, a Melbourne-based oil and gas analyst at Morgan Stanley. “If the Chinese stick to the pricing structure they agreed last time round in 2002 or 2003, then they are not going to get access to supply, full stop.”

Bloomberg