Australia, Indonesia win multibillion Chinese LNG contracts

Australia, Indonesia win multibillion Chinese LNG contracts

The Jakarta Post, Jakarta

China has awarded multi-billion-dollar contracts to
Australian and Indonesian consortiums to supply liquefied natural
gas (LNG) to the country.

Australian LNG (ALNG), a consortium led by Australian energy
giant Woodside Petroleum Ltd, was awarded the contract to supply
LNG to the Guangdong province over 25 years, while the Indonesia
consortium led by state oil and gas company Pertamina and Anglo-
American firm BP Plc was picked as the supplier for the
neighboring province of Fujian, AFP reported Thursday

Under its contract, ALNG will supply Guangdong with three
million metric tons of LNG per year from Australia's North West
Shelf LNG center, which is co-owned by BP, ChevronTexaco Corp.,
Royal Dutch/Shell Group, BHP Billiton and a joint venture owned
by Japanese firms Mitsubishi and Mitsui & Co.

The contract will bring in US$13.5 billion in revenue to the
consortium.

Meanwhile, BP and Pertamina will supply 2.5 million metric
tons of LNG per year to Fujian from the Tangguh LNG project in
Papua, with the first supply expected to come in 2006.

The Tangguh LNG project will be fed with gas extracted from
the gas fields in Manokwari regency, which contain 14.4 trillion
cubic feet of proven gas and are owned by BP along with Japanese
firms Mitsubishi, Kanematsu and Nissho Iwai.

China has built an LNG receiving terminal in Guangdong, while
the Fujian receiving LNG terminal has yet to be built.

CNOOC, China's third largest oil company, said Thursday that
the Tangguh project has been chosen as the supplier to the Fujian
terminal on condition they kept the same terms promised when they
bidded for the Guangdong LNG project.

The potential revenue to be received by BP, Pertamina and the
Indonesian government from the LNG sale over the contract period
remains unclear.

China initially launched a tender only for the LNG supply to
Guangdong, which drew bidders from six countries -- Indonesia,
Malaysia, Russia, Australia, Yemen and Qatar. Three bidders,
namely the BP-Pertamina consortium, Australian LNG and
ExxonMobil, which owns Qatar's Ras Laffan Liquefied Natural Gas
Co., were shortlisted for the final stage of the bidding.

As competition between Indonesia and Australia heated up,
leaders of both countries took turns visiting China to win the
favor of the Chinese government.

From Indonesia, both former President Abdurrahman Wahid and
President Megawati Soekarnoputri talked about the supply contract
with Chinese leaders during their visits to the country.

Australia's Prime Minister John Howard did the same during his
visit to the world's most populous nation.

Many analysts have recently speculated that Indonesia would
win the Guangdong supply contract and few of them, if any,
anticipated that China would offer an alternative to console the
loser in the Guangdong contract.

Although some Indonesian politicians could not conceal their
disappointment over Indonesia's failure to win the Guangdong
contract, some Indonesian officials seemed happy enough with the
"consolation prize" awarded by the Chinese government.

"We have to accept it," said Rachmat Sudibyo, chairman of the
newly-established oil and gas upstream authority known as the
Implementing Body.

"Indonesia is still more fortunate than Qatar, which lost
completely," Rachmat said, adding that Indonesia welcomed China's
decision.

Sabam Siagian, a member of the BP-formed International
Advisory Panel on the Tangguh Project, also welcomed the Chinese
decision.

"The decision shows that China wants to establish a firm
beachhead in Indonesia as a dependable energy supplier," Sabam
said.

However, legislator Priyo Budi Santoso of the Golkar party
blamed Indonesia's failure on the weak lobbying by the Indonesian
government, blasting especially the government's recent decision
to send a delegation to China, headed by Megawati's husband
Taufik Kiemas.

Priyo said Indonesia had many advantages over Australia for
winning the Guangdong LNG supply contract, but Megawati seemed
not to be serious by sending her husband to lobby the Chinese
government in favor of Indonesia.

"This was a grave mistake. And I believe our failure to win
the Guangdong contract was caused by the Taufik Kiemas factor,"
Priyo was quoted by Antara as saying.