China National Petroleum Corporation (CNPC), China's largest oil and gas producer, said Wednesday it has signed an agreement with ExxonMobile to purchase 2.25 million tons of liquefied natural gas (LNG) annually from the Gorgon field in Australia for 20 years.
According to the agreement signed between PetroChina International Co Ltd, the specialized international trade subsidiary of CNPC, and Mobile Australia Resources Company Pty Ltd, the Gorgon field is expected to provide LNG to CNPC after it was put into production in 2014 or 2015.
Martin Ferguson, Australia's energy and resources minister, said in a statement that the deal is worth an estimated A$50 billion, amounting to $41 billion.
The Gorgon project, in the northwestern sea area of Australia, is one of the world's largest proposed gas project. With an estimated recoverable reserve of 40 trillion cubic feet of natural gas, the project is expected to produce 15 million tons of LNG after its first-phase three LNG production lines were completed.
The cooperation laid a good basis for the long-term strategic cooperation between the two sides, said CNPC.
The Australian government announced Wednesday the record A$50 billion gas deal with China.
Australian Federal Minister for Trade Simon Crean hailed the agreement as the single biggest trade deal in Australia's history.
"But it is the great deal from China in terms of a clean-energy source," he said, adding that Australia had a huge comparative advantage in clean energy.
The Gorgon plant would be "world leading" in terms of carbon capture and storage.
"We're not just selling the gas, we're also selling the technology," Crean added.
"This is another example of the importance of the inter-relationship between Australia and China."
China's demand for natural gas has boosted LNG imports. With two LNG terminals under construction in northeast China's Liaoning province and eastern Jiangsu province, CNPC signed long-term purchase contracts with Shell and Woodside in 2007 for four million tons of LNG annually for 20 years and with Qatargas and Shell for three million tons of LNG annually that would last for 25 years.
The Rio Tinto case would not and should not hurt the trade and economic ties between China and Australia, Vice Minister of Commerce Fu Ziying said last Wednesday.
Stern Hu, head of Rio Tinto's Shanghai office, was detained by Chinese authorities in early July along with three other staff on charges of spying and stealing state secrets.
The $19.5 billion of bid from Aluminum Corporation of China (Chinalco) failed in June to raise its stake in Rio Tinto. Instead, Chinalco said in early July it had bought $1.5 billion of Rio Tinto shares to cement its 9 percent shareholding in the miner.