Chinese companies are in talks with Australian partners to import more liquefied natural gas (LNG) to China's affluent east coast, which would make the business the largest area of trade between the two countries.

If the talks are fruitful, Chinese oil companies, including China National Offshore Oil Corp (CNOOC) and Sinopec, may also buy equity in some of Australia's largest gas projects, such as Gorgon, Browse and Sunrise.

The deal would make Australia China's largest supplier of LNG. The country has already clinched a record-breaking US$19 billion deal to ship the super-cool, condensed fuel to a CNOOC terminal in South China's Guangdong Province for 25 years. Delivery will start next year.

"We will further explore co-operation in projects such as Gorgon and Browse," said Ma Kai from the National Development and Reform Commission at the two-day Boao Forum for Asia, which closed yesterday. "We are making progress."

"We pay special attention to co-operation with Australia as we have had successful co-operation before. We hope Australia cherishes the market opportunity and continues to deepen the co-operation," Ma said.

The chief executive officers of CNOOC and Sinopec met their Australian counterparts from Woodside Petroleum and ChevronTexaco Australia Pty Ltd at the forum.

The Gorgon project, located off the northwest coast of Australia, is estimated to have gas reserves of 40 trillion cubic feet, nearly one third of Australia's total proven total, according to James Johnson, managing director of ChevronTexaco Australia Pty Ltd. The company is a partner in the Northwest Shelf, Gorgon and Browse projects.

CNOOC signed a preliminary agreement with partners from the Gorgon field in 2003 to import at least 80 million tons of LNG over 25 years.

The Browse Gas Project is estimated to have gas reserves of more than 20 trillion cubic feet. Sunrise in the Timor Sea has a reserve of more than 9 trillion cubic feet.

Operators of the projects, including Woodside and ChevronTexaco, are pitching the gas in the fast growing LNG markets of China, North America, Japan and South Korea.

Don Woelte, chief executive officer and managing director of Woodside, told reporters that the company expects to conclude the LNG sales of the Browse project before it starts pumping the gas at the end of 2007.

CNOOC's CEO Fu Chengyu told the forum that China's annual gas consumption is expected to reach up to 250 billion cubic metres by 2020. Half of the demand will be met by LNG imports.

At present, four LNG receiving terminals are, or soon will be, under construction in Guangdong, Fujian and Zhejiang provinces and Shanghai.

At least 11 more projects for the coast are being studied. These projects, if approved, may make China the second largest LNG importer in Asia after Japan in the next decade.

At the forum, government officials and company executives touted LNG co-operation between the two countries as having a "bright future," given the fact that Australia is rich in the resource and both countries are geopolitically important to each other.

"Two things are clear. First, China's demand for LNG is one of the fastest growing in the world. Second, Australia is well placed to meet that demand," said Johnson.

CNOOC's Fu called for increased efforts to expedite the co-operation.

He said the two countries should accelerate negotiation of a free trade agreement to facilitate the energy trade.

(China Daily April 25, 2005)