China LNG tender result soon, as study almost ready: report<\/p>\n
Dow Jones
\nSingapore<\/p>\n
China will announce the winner of the US$13 billion liquefied
\nnatural gas supply contract any day now, as the feasibility study
\non the construction of an LNG terminal in Guangdong will be
\ncompleted in August, Hong Kong-based HSBC Securities (Asia) said
\nin a report issued Tuesday.<\/p>\n
The study is being conducted by China National Offshore Oil
\nCorp. and its partners.<\/p>\n
Of the three bidders, BP PLC's Tangguh project in Indonesia is
\nthe frontrunner, followed by Australia's Northwest Shelf gas
\nproject and Qatar's Ras Laffan Liquefied Natural Gas Co., or
\nRasGas, the report said.<\/p>\n
The North West Shelf is an equal joint venture comprising
\nWoodside, the Royal Dutch\/Shell Group, ChevronTexaco Corp., BHP
\nBilliton, BP, and Japan Australia LNG, an equal joint venture
\nbetween Japan's Mitsubishi Corp. and Mitsui & Co..<\/p>\n
RasGas is a unit of Exxon Mobil Corp..<\/p>\n
\"It is a close call between Indonesia and Australia,\"
\naccording to the report.<\/p>\n
HSBC believes BP will emerge as the winner, \"considering the
\nissues of supply pricing, energy security and political factors.\"<\/p>\n
However, the report said China will ask BP for a sizable
\nequity stake in its Tangguh project, probably 20 percent, in
\nexchange for the supply contract, and as a \"punishment\" for BP's
\npullout from China's west-to-east gas pipeline project.<\/p>\n
China may also insist on using Chinese ships to transport LNG.<\/p>\n
BP's Tangguh gas project in Indonesia would be a sure win if
\nthe price is the sole consideration,\" the report said. BP and
\nIndonesia's state-owned Pertamina each has a 50 percent stake in
\nthe Tangguh project, which has proven gas reserves of 14 trillion
\ncubic feet.<\/p>\n
The report didn't say the price level BP has offered to China,
\nbut industry sources said \"it is very low.\"<\/p>\n
Another reason cited by the report on why China will choose BP
\nis that Shell and ExxonMobil already owned stakes in gas
\ndevelopment projects in China's Tarim basin through production
\nsharing contracts.<\/p>\n
\"(China) will ultimately select BP for the Guangdong LNG
\nsupplier role to diversify the risks among the supper oil
\nmajors,\" it said, adding BP's Tangguh project will allow CNOOC
\naccess to a wider range of upstream reserves.<\/p>\n
The odds for ExxonMobil's RasGas are slim, because LNG from
\nthe Middle East offers no price advantage and RasGas has no
\nsupply experience, the report said.<\/p>\n
The only leverage for Qatar is that Middle East accounted for
\n56 percent of China's crude oil imports in 2001, which may give
\nQatar some bargaining power, the report said.<\/p>\n
The winner will supply 3 million tons a year of LNG to China's
\nGuangdong province starting 2006, rising to 5 million tons\/year
\nby 2008 for 25 years.<\/p>\n
Last year, BP won a 30 percent stake in the $600 million
\nGuangdong LNG terminal project. The feasibility study by the
\nCNOOC-led consortium will be completed soon and construction is
\nexpected to start later this year or early next year.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/china-lng-tender-result-soon-as-study-almost-ready-report-1447899208",
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"sponsor": "Okusi Associates",
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