September 7, 2007
China signs for its gas supplies
PetroChina, the listed but state-controlled Chinese energy group, has signed a 15-year, $37bn deal to buy liquefied natural gas from Woodside Petroleum’s planned Browse project in Australia. The deal follows a similar 20-year contract signed a couple of days ago with Royal Dutch Shell for LNG from Chevron’s Gorgon project, also off Australia, in which Shell has a stake. (FT stories may require subscription)
In the past few years - since oil prices started to rise - the main action in China has been in coal; the country has been putting on coal-fired electricity generation capacity at a rate equivalent to a good-sized new power station every week.
The fact that China is now trying to tie up gas supplies, at prices apparently well above what it was prepared to pay in 2002, suggests it has caught on to the prevailing thinking in energy-importing countries in the West: above all it is diversity of supply that fosters security.
It is also evidence of what looks like a looming global shortage of LNG. With the delays hitting projects such as Gassi Touil in Algeria (where the government is kicking out Repsol, the operator), and demand growing at double-digit rates, it looks as though there is not going to be enough LNG to go round.
