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Australia to sign energy agreement with Mexico – report

AFX Europe (Focus): Australia to sign energy agreement with Mexico – report

“…one of its Gorgon partners, Shell, have signed letters of intent covering 20-year contracts from Gorgon which could be used to supply the US west coast.”

Sep 10, 2004

SYDNEY (AFX) – Australia has negotiated an energy agreement with Mexico aimed at opening up a 50 bln aud market for liquefied natural gas (LNG) on the US west coast, The Australian newspaper reported.

It said Federal Resources Minister Ian Macfarlane revealed the plan at an energy conference here yesterday.

The newspaper reported Macfarlane as saying a memorandum of understanding had been scheduled to be signed this week but will be delayed because of the calling of Australian federal elections for Oct 9.

Political convention constrains caretaker governments from signing commitments that bind their successors.

The Mexican energy MOU, on a government-to-government basis, will cover supply of coal and natural gas and also provide for the exchange of technical information.

Macfarlane said the MOU will act as a backstop if California’s environmental authorities blocked the development of LNG receival terminals in the state.

US Energy Secretary Spencer Abraham has previously indicated the federal administration prefers gas to be delivered direct to west coast terminals, rather than being piped from Mexico, because of supply security issues.

ChevronTexaco — the operator of the Gorgon gas project in Western Australia — and one of its Gorgon partners, Shell, have signed letters of intent covering 20-year contracts from Gorgon which could be used to supply the US west coast.

Shell, Sempra Energy and Marathon Oil have proposed LNG terminals in Baja, California, while Chevron has applied for a permit there.

Shell also has regulatory approval for its 370 mln usd Altamira regasification terminal on the Mexican Gulf coast.

Macfarlane said Australia could gain up to a third of the Californian gas market, depending on the timing of the terminal projects.

(1 usd = 1.45 aud)

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