Australia's PM: China LNG Contract Could Upgrade Ties

CANBERRA, May 22 (Dow Jones) - China's choice of Australia's North West Shelf project to supply liquefied natural gas to China's first LNG import facility could lead to an upgrading of relations between the two countries, Prime Minister John Howard said Tuesday.

"If we can win the bid I think that will help to inaugurate a new phase in the relationship," he said.

However, the Prime Minister reiterated it will be "very tough" for the Australian bidder to win the supply contract.

Howard was talking to reporters after arriving Tuesday in Beijing for a two-day visit, in part to lobby on behalf of the North West Shelf project, one of three potential suppliers on a Chinese shortlist for the contract.

A transcript of Howard's remarks was made available here early Wednesday.

China is assessing which of three consortia will supply 3 million metric tons of LNG to China's first import terminal in Guangdong province, a contract potentially valued at A$750 million a year.

An announcement about the contract is imminent, according to a timetable issued by the Chinese government.

Australia's North West Shelf project is competing against Qatar's Ras Laffan Liquefied Natural Gas Co. and BP PLC's Tangghu project in Indonesia for the LNG supply contract.

Howard said what sets the Australia project apart as a potential supplier from the other two is "stability, predictability, 12 years of flawless delivery on contracts on time, on budget, in full, as promised."

The North West Shelf is an equal joint venture comprising Woodside Petroleum Ltd., Royal Dutch/Shell Group, ChevronTexaco Corp., BHP Billiton, BP and Japan Australia LNG, an equal joint venture between Japan's Mitsubishi Corp. and Mitsui & Co.

Ray Brindal, Dow Jones Newswires, 612 6208 0902 ray.brindal@dowjones.com