Interview: Australia LNG Upbeat As China Decision Looms

By Owen Brown 

BEIJING, May 22 (Dow Jones)--Last minute lobbying efforts are underway this week as the three candidates for a A$1 billion a year liquefied natural gas contract to China try to push their prospective bids. 

U.K. Deputy Prime Minister John Prescott met Premier Zhu Rongji and officials at the State Development Planning Commission this week to push a bid by BP Plc (BP) based on its natural gas field in Indonesia. 

And Australia's Prime Minister John Howard Wednesday began meetings with President Jiang Zemin and Premier Zhu to push the North West Shelf Project's bid for the supply contract. 

Australian LNG Ltd president Arthur Dixon, who is accompanying Howard on the official visit to China, remained confident of the North West Shelf's prospects of winning the lucrative contract. 

The Australian gas field is operated by BHP Petroleum (North West Shelf) Pty. Ltd., BP Developments Australia Pty. Ltd., Chevron Australia Pty. Ltd., Japan Australia LNG Pty. Ltd., Shell Development Pty. Ltd. and Woodside Energy Ltd. ALNG is the consortium's marketing arm. 

Dixon described the Prime Minister's visit to China as "useful". As for the timing of the announcement, Dixon said that remains in the hands of the Chinese. 

"What we know is that there is a target date for delivery in December 2005," Dixon told Dow Jones Newswire. "On our side we are basically ready to deliver in 2004." 

Fourth Production Train 

Australia, Indonesia and Qatar are the three shortlisted candidates that were invited by the State Development and Planning Commission to submit a final bid by April 21. 

Indonesian President Megawati Sukarnoputri visited China in March accompanied by a delegation from Pertamina, the state-run oil and gas company. 

A Qatari delegation also visited China this year to support the Ras Laffan Liquified Natural Gas Co. (C.RLL) bid. 

The winner will be awarded a long-term contract to supply LNG to a receival terminal to be built in Shenzhen, a southern boom town bordering Hong Kong. 

China's third major oil company, CNOOC Ltd (CEO) is leading a consortium to build the terminal, with partners including BP PLC (BP), Hong Kong Electric Holding Ltd., and Hong Kong & China Gas Co. (H.HKC). 

"We are quite convinced that we have put in the best bid," Dixon said. "It's a comprehensive package covering all the aspects, not only price but al the other elements." 

"But the decision rests with the Chinese," he said. 

Dixon said the North West Shelf project is currently operating three trains to produce a total of 7.5 million metric tons of natural gas. Another train currently under construction is much bigger and will add 4 million tons, he said. 

"If we were to be awarded the 3 million ton additional production which is what we are seeking at the moment that would strengthen the need for a further production train," Dixon said. "The timing of that train depends on the build up of new customers." 

-By Owen Brown, Dow Jones Newswires; 8610 6588-5848; owen.brown@dowjones.com