CNOOC's Australian gas deal on track

CNOOC Ltd said it expects its second shipment of liquefied natural gas from Australia to arrive at its Guangdong Province terminal at the end of next month as China encourages greater use of the cleaner-burning fuel to meet domestic energy demand. At the same time, some analysts contend that the nation's LNG infrastructure construction projects are proceeding too quickly, as most haven't secured gas supply. The country's dominant offshore oil and gas producer said yesterday its second shipment from Down Under will land on June 27. The first load arrived on Thursday after a weeklong voyage. The deliveries are the result of a 25-year, A$25 billion (US$19 billion) contract between CNOOC and the North West Shelf venture, which will supply China with more than 3.3 million metric tons of LNG, or 50 shipments a year. CNOOC and the country's two other oil giants, Sinopec Corp and PetroChina Co, are also showing interest in LNG projects in line with the government objective to boost the use of natural gas over coal. Gas over coal The energy share produced by natural gas is expected to reach 6 percent by 2010 and 10 percent by 2020 from the current 3 percent, according to the National Development and Reform Commission. Companies should first secure their gas resources before they start their infrastructure projects, experts said. The government ruled that any company that wants to start a LNG project should have a stake in an upstream gas venture to hedge risks. "But that's still not adequate if you don't hold a controlling stake," said Han Xiaoping, senior vice president of energy consult Beijing Falcon Pioneer Technology Co. The big-three oil companies have announced 18 LNG projects with total designed capacity of 60 million tons by 2005, while construction on some has slowed because talks with overseas gas suppliers have advanced slowly, according to a Shanghai Securities News report yesterday. CNOOC LNG projects in Shanghai and Hainan Province, PetroChina's projects in Jiangsu Province and Liaoning Province and Sinopec's projects in Qingdao and Lianyungang, for example, haven't secured their gas supply, the report said.
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