Gas deal is more than hot air

China National Offshore Oil Corp and the Gorgon Venture Participants have recently signed an agreement which is expected to lead to one of the biggest LNG deals in the industry’s history.

China National Offshore Oil Corp (CNOOC) and the Gorgon Venture Participants recently signed an agreement which is expected to lead to one of the biggest Liquid Natural Gas (LNG) deals in the industry’s history.

The Gorgon development is based on one of the largest gas fields ever discovered in Australia and is one of the world’s largest hydrocarbon resources. The Gorgon Joint Venture participants consist of ChevronTexaco, Shell and ExxonMobil.

The agreement calls for the parties to place a significant volume of Gorgon LNG for use in the growing Chinese market.

Subject to the completion of formal contracts, CNOOC Limited will purchase a substantial equity stake in the Gorgon gas development, and its parent, CNOOC will arrange to purchase foundation volumes of LNG from Gorgon for use in China. CNOOC will also assist Gorgon to secure markets in China for a further designated amount of LNG.

Jay Johnson, Managing Director of ChevronTexaco Australia – the operator of the Gorgon Joint Venture – said the agreement with CNOOC is significant as it provides a basis to underpin the commercialisation of the Gorgon gas field.

‘In addition, Gorgon’s world class gas reserves make it well placed to meet demand in the growing Chinese energy market,’ Mr Johnson said.

CNOOC is already involved in two LNG receiving terminal projects in China, Guangdong and Fujian. Western Australia’s sister state, Zhejiang, is one of several new locations identified for the expanding LNG trade in China’s southern and eastern provinces.

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