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Bloomberg: CPC Plans to Buy LNG From Woodside Browse Project in Australia

By Yu-huay Sun and Angela Macdonald-Smith

Sept. 10 (Bloomberg) — CPC Corp., Taiwan’s only natural gas importer, plans to buy liquefied natural gas from Woodside Petroleum Ltd.’s Browse project in Western Australia, becoming the venture’s second customer, a CPC official said.

CPC may sign a final contract this year to buy as much as 3 million metric tons of the fuel annually, said the official, declining to be identified because of a confidentiality agreement with Woodside. Supplies may start in 2013.

Taiwan’s LNG demand is forecast to rise 31 percent to 10.5 million tons in 2010, and to double by the end of the next decade. The island uses LNG for more than 90 percent of its gas and is Asia’s third-largest buyer of the fuel. CPC’s contract may be valued at as much as $37 billion, based on a similar agreement Woodside signed with PetroChina Co. last week.

“CPC is in desperate need of LNG supplies,” said Wu Tsai- yi, a vice president at the Taiwan Research Institute, who advises the government on energy policy. “Two to three million metric tons a year isn’t enough.”

The Taiwanese oil refiner is in talks to buy 500,000 tons a year of LNG from Peru, and Iran is another possible source of the fuel, said the CPC official, declining to name the potential sellers in Iran.

Jessica Tang, a CPC spokeswoman, and Roger Martin of Perth- based Woodside, declined to comment.

PetroChina Accord

PetroChina, Asia’s largest oil company by market value, Sept. 6 agreed to buy 2 million to 3 million metric tons a year of LNG over 15 to 20 years starting in 2013 to 2015 from Browse, 47 percent-owned by Woodside. The project, Woodside’s largest undeveloped gas asset, is set to tap about 20 trillion cubic feet of gas and 311 million barrels of condensates off the northwest coast.

PetroChina may have agreed to pay $7-$9 per million British thermal units for the gas, UBS AG said in a Sept. 6 report.

“There probably won’t be big differences between the CPC and PetroChina deals,” Wu said.

The transaction with Asia’s largest oil company by market value is worth between A$35 billion and A$45 billion ($37 billion) in revenues, Woodside Chief Financial Officer Mark Chatterji said Sept. 6.

Woodside Chief Executive Officer Don Voelte said Aug. 24 the Australian company is set to widen its range of long-term LNG customers beyond Japan, South Korea and China. The company doesn’t currently have any long-term contracts to sell LNG to Taiwan.

BHP, Chevron

BP Plc, BHP Billiton Ltd., Chevron Corp. and Woodside’s 34 percent shareholder Royal Dutch Shell Plc own stakes in Browse. Woodside owns about 47 percent of the venture and is the operator.

CPC has three contracts with Indonesia and Malaysia for 5.6 million tons of LNG a year. A 25-year contract with Ras Laffan Liquefied Natural Gas Co., known as RasGas, for as much as 3 million tons a year, will start in 2008. RasGas is a Qatari joint venture with Exxon Mobil Corp., the world’s largest publicly traded oil company.

CPC’s first contract with Indonesian state oil company PT Pertamina for 1.54 million tons of LNG a year will expire in 2009 and a second contract for 1.84 million ends in 2017.

The state-owned Taiwanese energy company’s contract with Malaysia LNG Sdn. for 2.25 million tons a year will end in March 2015. Malaysia LNG is a unit of Petroliam Nasional Bhd.

LNG is natural gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume at minus 161 degrees Celsius (minus 259 Fahrenheit), for transportation by ship to destinations not connected by pipeline. On arrival, it’s turned back into gas for distribution to power plants, factories and households.

To contact the reporter on the story: Yu-huay Sun in Taipei [email protected] ; Angela Macdonald-Smith in Sydney at [email protected]

Last Updated: September 9, 2007 23:44 EDT

 

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